A stall in Quezon City utilizes various online platforms to sell various Christmas decor on September 1, 2020, the start of the 'ber' months where the country celebrates the longest Christmas season. The stall has turned to online selling to cope with the low physical store sales due to the pandemic. Mark Demayo, ABS-CBN News

MANILA -- The Bureau of Internal Revenue (BIR) on Tuesday reminded online sellers that online marketplace operators will impose withholding taxes on them starting July 15.

This comes after the BIR pushed back by 90 days the start of the collection of withholding tax to help businesses comply with the requirements of government agencies and to give the affected parties an opportunity to adjust with the provisions of Revenue Regulation No. 16-2023.

No further extensions will be given, said Commissioner Romeo Lumagui Jr. 

BIR extends witholding tax filing for online sellers

The measure imposes a 1 percent creditable withholding tax on half of the gross remittances made by electronic marketplace operators and digital financial service providers to sellers or merchants. This translates to 0.5 percent of the total gross remittances.

Exempted are those who have annual gross remittances not exceeding P500,000, or if the online seller is duly exempt pursuant to any existing law or treaty.

Online shopping apps, food delivery apps, online hotel booking sites, transport service apps and other online platforms are covered by this policy.

"It's merely a system of taxation where taxes are collected at source, which will be credited against the total income tax liability of the sellers/merchants," he said.

He stressed that the BIR only wants to level the playing field between brick-and-mortar stores, which are regularly complying with their tax obligations, and online market places. 

Withholding tax on online sellers not a new tax: BIR