Business Bayani PH

The Bureau of Internal Revenue (BIR) has clarified that not all online sellers need to adhere to the government’s withholding tax regulations. In a recent statement, the BIR highlighted that electronic marketplace operators and digital financial service providers, such as Lazada and Shopee, are mandated to withhold a one percent tax on half of their gross remittances to online sellers.

This withholding tax, however, applies only if the e-marketplace operators’ annual total gross remittances to online sellers surpass ₱500,000 for the preceding taxable year. BIR Commissioner Romeo D. Lumagui Jr. clarified on January 29 that small-scale online sellers are exempt, showing the BIR’s sympathy toward taxing them.

To make it clear, the BIR said that online sellers are exempt from the new tax rule if their yearly and total gross payments stay under ₱500,000.

If your online business exceeds the ₱500,000 annual gross remittance, the BIR chief says it’s fair to apply withholding tax. The goal is fairness to both online and traditional retail businesses—everyone must register and pay taxes as part of their responsibility.

Following the rules, online sellers exceeding the ₱500,000 threshold must submit a sworn declaration to the BIR, along with one from e-marketplace operators. This document should be submitted by the 20th day of the first month of each taxable year.

The BIR’s goal is to balance things—exempting small-scale sellers from extra taxes but making sure larger online businesses meet their tax obligations. This decision shows a practical approach to taxation, recognizing the diversity in online selling.

As e-commerce grows, the BIR values a fair tax setup. Exempting small online sellers supports the government’s push for entrepreneurship, especially in the digital realm. This not only helps individual entrepreneurs but also boosts the digital marketplace. By excluding those below the ₱500,000 threshold, the BIR encourages inclusivity in online commerce, sparing individuals from extra tax duties.

To ensure fairness, those exceeding the threshold must submit a sworn declaration, emphasizing transparency and accountability. This step reinforces the principle that businesses, regardless of their platform, share the responsibility of contributing to the nation’s revenue.◼