Merchants who sell products via online platforms will start paying a creditable withholding tax as the Bureau of Internal Revenue (BIR) looks to collect it by Q4 2023.

In a proposal released earlier this year, the BIR proposed a creditable withholding tax of 1 percent of half of the gross revenues of online platforms to their partner merchants or sellers.

Per BIR Commissioner Romeo Lumagui Jr., in a statement in May, he clarified that the proposition about the tax is nothing new but rather just a different mode of collecting tax, inferring the lawfulness of the procedure.

Via an interview, Lumagui said that the collection of the said tax will begin in the fourth quarter of 2023, citing this year as the time of the initial rollout, followed by full implementation in 2024.

By definition, withholding tax is the withheld amount by a business in payment of services or goods which, in turn, gets remitted to the government at the behest of employees or suppliers.

Meanwhile, Lumagui claimed that talks about said taxation remain on the table involving concerned parties as the agency tries to keep an open mind to all the inputs.

Apart from making online sellers be held accountable to declare their income through online sales, coinciding with the influx of such transactions on e-commerce platforms, for taxation purposes, Lumagui reiterated the importance of taxation as a means to level the playing field for traditional brick-and-mortar retailers.

Making the situation easier to grasp, the BIR chief compared the taxing of online sellers to how malls gather fees from their tenants.

The United Filipino Consumers and Commuters (UFCC), however, is urging the reconsideration of the plan, suggesting its “heavy blow” impact on the average Filipino individual who will have to suffer the brunt of the new tax when it takes effect.

UFCC is also calling on e-commerce platforms to be the voice for their partner merchants and sellers as they are represented to the BIR.

Via: GMA News

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