Apart from overseeing online sales, the Bureau of Internal Revenue (BIR) is thinking about introducing a 1% withholding tax on transactions made through digital payment channels. This idea follows the BIR’s proposal to impose a 1% withholding tax on half of the total remittances made by online platform providers to their partner sellers.
Withholding tax is the money held back by a business when making payments for goods or services, and it’s sent directly to the government on behalf of suppliers or employees. The BIR is currently figuring out how this tax would work for transactions using digital payment channels.
The BIR chief mentioned that they might use the same rules that apply to collecting withholding tax on credit card payments for transactions through digital payment channels.
According to BIR regulations, credit card companies hold back 1% of 50% of the total amount paid to businesses involved in transactions by cardholders.
Additionally, the BIR plans to start implementing the 1% withholding tax on online sellers by December of this year. The BIR chief advises operators of online platforms to make sure that their partner-merchants are registered with the BIR before allowing them to sell on digital marketplaces. The tax agency also intends to enforce an “Online Kandado” against platforms that don’t comply.
via GMA News Online
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