THE Bureau of Internal Revenue (BIR) expects to hit its collection target this year, citing encouraging signs of compliance by the vaping industry and the new withholding tax on online sellers.
“(On) what we’re doing in the second semester, I hope that the imposition (of withholding tax) and strict monitoring of vape products, as well as our crackdown on the illicit cigarette trade, will be enough,” BIR Commissioner Romeo D. Lumagui, Jr. told reporters on the sidelines of an event on Tuesday.
The BIR, which accounts for 70% of government revenue, missed its collection target for the first half, generating P1.36 trillion, below the P1.403-trillion goal set for the bureau.
Starting June 1, the BIR ordered all vape manufacturers to mark their products with revenue stamps to ensure tax compliance.
“We’ve seen an increase in the number of registered vape products and an increase in collections since we started implementing the stamps on vape products,” Mr. Lumagui said.
The BIR expects to collect P3.055 trillion this year.
Mr. Lumagui also said that the recently imposed withholding tax on online sellers will help increase the BIR’s collections in the next six months.
He said that the 90-day extension in complying with the withholding tax delayed the revenue expected to be generated from this tax.
“For us, it’s okay that we were not able to collect immediately. At least we gave our taxpayers a chance to comply with the new system,” Mr. Lumagui said.
In April, the BIR extended the transition period for online sellers to adjust to the withholding tax by another 90 days, or until July 14, at the private sector’s request.
Under BIR regulations, a withholding tax of 1% will be imposed on one-half of the gross remittances of e-marketplace operators and digital financial service providers to the sellers or merchants of the goods and services carried on their platforms.
For their part, online sellers must also register with the BIR to ensure compliance with the new system.
Those covered by the regulation include electronic marketplaces for online shopping, food delivery platforms, platforms to book lodging accommodations, and other similar online marketplaces.
On the other hand, digital financial service providers were given until Oct. 12 to transition to the withholding tax.
The tax will not be imposed if the annual total gross remittances to an online seller for the past taxable year does not exceed P500,000; if the cumulative gross remittances to an online seller in a taxable year does not exceed P500,000, or if the seller is duly exempt from or subject to a lower income tax rate pursuant to any existing law or treaty.
The BIR has yet to estimate how much revenue will be generated from the withholding tax.
To ensure that a withholding tax is also collected from online sellers based overseas, they will have to register in the Philippines as online merchants, BIR said.
Unregistered foreign online sellers will be levied a final withholding tax at a higher rate than the usual withholding tax, BIR said.
Mr. Lumagui also clarified that the withholding tax should not push up prices on online selling platforms.
“This is not like a VAT or value-added tax that is imposed or added to the prices of products. This is just a tax (which advances) income tax,” he said.
Finance Undersecretary Renato E. Reside, Jr. told reporters separately that imposing the withholding tax would help bring the Philippine tax system in line with that of other countries. — Beatriz Marie D. Cruz
