By Komfie Manalo
There's one for you and 19 for the taxman.
Buying online will become more expensive as the Bureau of Internal Revenue (BIR) announced it would impose withholding taxes on online sellers or merchants.
"Electronic marketplace operators will begin imposing withholding tax against their sellers/merchants starting July 15, 2024. We have already extended this by 90 days. " BIR Commissioner Romeo Lumagui Jr. said in a news release that no further extensions will be given.
In December last year, the BIR issued Revenue Regulation 16-2023, requiring online merchants with earnings of more than P500,000 annually to pay a one percent withholding tax.
The withholding tax will apply to half the gross remittances by electronic marketplace operators and digital financial services providers of sellers or merchants for the goods or services sold through their platforms.
BIR Revenue Memorandum Circular 55-2024 provided a 90-day extension to allow affected parties to adjust to the imposition of the withholding tax.
According to the BIR, the extension was granted to recognize the compliance needed with other government agencies' relative policies or requirements and to give the affected parties time to adjust.
"Withholding tax is not a new tax. It's merely a taxation system where taxes are collected at source, which will be credited against the total income tax liability of the sellers/merchants," Lumagui said.
He said the BIR aims to level the playing field between brick-and-mortar stores, which regularly comply with their tax obligations, and online marketplaces.
"Whether their business is operated online or through physical stores, sellers and merchants must pay their taxes," he said.
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