THE Bureau of Internal Revenue (BIR) said it has released the final draft of its proposed creditable withholding tax policy for gross remittances of electronic marketplace operators to online sellers.
In the final draft, a withholding tax of 1% will be imposed on one-half of the gross remittances by domestic e-marketplace operators to the online merchants for the goods or services sold through their facility.
In April, the BIR released an advisory announcing its proposal to impose a withholding tax on online sellers. The initial draft rule also proposed a creditable withholding tax of 1% on one-half of the gross remittances of online platform providers to their partner sellers or merchants.
The proposal would amend Revenue Regulations No. 2-98, which does not address income payments by online platforms.
The BIR defines an electronic marketplace as a “digital platform whose business is to connect online consumers with online merchants, facilitate and conclude the sales, process the payment of the products, goods or services through platform, or facilitate the shipment of goods or provide logistics services and post-purchase support within such platforms, and otherwise retains oversight over the consummation of the transaction.”
These would include marketplaces for online shopping; food delivery platforms; platforms for booking of resort, hotel, motel, inn, bed space, and other related accommodations; and other service or product marketplaces.
The final draft also defined gross remittances as the total amount of the value of the goods or services, net of the following: sales returns; separately billed delivery or shipping fees; and value-added tax, collected by the e-marketplace operator from the online consumer and subsequently remitted to the online seller; and consideration for the use of the e-marketplace.
The final draft states that the withholding tax will not apply if annual total gross remittances to an online merchant for the past taxable year do not exceed P250,000; if the cumulative gross remittances to an online merchant in a taxable year has not yet exceeded P250,000; or if the online merchant is a cooperative duly registered with the BIR with a valid Certificate of Tax Exemption.
“Since tax herein involved and being withheld is income tax, the burden of the tax is really upon the seller although the mode of payment of the tax is through withholding by the buyer, or by the e-marketplace operator, in case the payment for the sale of goods or services were made therein,” the BIR said.
“As such, the tax withheld is considered a part of the consideration agreed upon between the seller and buyer resulting, therefore, to a net take to the seller of only the difference between the agreed consideration/selling price and the tax withheld,” it added.
The BIR also said in its advisory that it is accepting comments on the final draft until Oct. 27. — Luisa Maria Jacinta C. Jocson