The Bureau of Internal Revenue (BIR) has decided to delay the implementation of the one percent withholding tax on online platform providers until mid-July instead of mid-April. This extension aims to give taxpayers more time to adjust to the new regulation.
According to BIR Commissioner Romeo Lumagui, the decision to extend the period was made to allow online sellers and merchants to comply with the necessary requirements and make the needed adjustments to their systems. The BIR is hoping to start collecting revenues from the withholding tax once the extended period ends in July.
The withholding tax of one percent will be imposed on half of the gross remittances made by electronic marketplace operators and digital financial services providers to sellers. However, this tax will not apply to online merchants whose annual total gross remittances have not exceeded P500,000 for the past taxable year.
The BIR defines e-marketplace as a digital platform that connects online consumers with online merchants to facilitate sales and payments. There are approximately two million entities involved in online selling as of the end of 2023.
