BIR slaps 1% withholding tax on online merchants

The Bureau of Internal Revenue (BIR) has officially imposed a one percent withholding tax on online platform providers as part of government efforts to tap digital transactions for economic growth.

- LOUISE MAUREEN SIMEON

 

In its latest revenue regulation, the BIR is imposing a withholding tax on gross remittances made by electronic marketplace operators and digital financial service providers to sellers or merchants for goods and services sold or paid through the former’s platform and facility.

In April this year, the BIR had sought comments from stakeholders on the new revenue measure.

It took the agency more than six months to come up with the final draft in October before issuing the regulation this December.

A withholding tax is a kind of tax on the salary earned by a certain employee. Based on the current framework, employers are required to deduct a certain percentage of their employee’s salary, which in turn will be remitted to the BIR.