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Manila Bulletin devider Business devider BIR expects big jump in online industry income tax

BIR expects big jump in online industry income tax

Published Nov 14, 2023 03:02 am

At A Glance

  • The Bureau of Internal Revenue (BIR) expects a significant increase in income tax collection from online sellers next year.<br>Platform service providers like Lazada, Shopee, Amazon, and TikTok will enforce a one-half of one percent creditable withholding tax on payments to online sellers.<br>Unregistered online sellers will have their orders rejected by platform service providers.<br>The BIR aims to enhance tax compliance in online transactions.<br>Revenue Assistant Commissioner Jethro M. Sabariaga believes that the additional income from online sellers will be substantial, but an estimate has not been provided.<br>Most items available on the internet are believed to come from China, according to Sabariaga.<br>The tax on online sellers is not new but is an integral part of the income tax system, applicable to those earning over P250,000 annually.<br>The collection of the tax is set to start in January next year, pending the finalization and approval of draft regulations by Finance Secretary Benjamin E. Diokno.

The Bureau of Internal Revenue (BIR) expects a significant increase in income tax collection next year from online sellers, as the one-half of one percent creditable withholding tax will be enforced by platform service providers like Lazada, Shopee, Amazon, and TikTok.

These providers will withhold the tax before remitting payments to sellers, with a mandate to reject orders from unregistered online sellers.

Despite previous challenges in listing online sellers, the BIR aims to enhance tax compliance in this trillion-peso transactions.

"Many customers no longer go and buy supplies from traditional brick and mortar stores but online for convenience and less cost," said Revenue Assistant Commissioner Jethro M. Sabariaga of the large taxpayers service.

He could not make estimate of additional income from this source, but said "very substantial as we have yet determine who are big and small among these traders."

In the absence of accurate monitoring system, Sabariaga believed that the bulk of the items available in the internet comes from China.

He pointed out that the tax is not new but an integral part of the income tax system, applicable to those earning over P250,000 annually. 

The collection is set to start in January next year pending the finalization and approval of draft regulations by Finance Secretary Benjamin E. Diokno.

Previous attempt to list online traders faced difficulties, with many being untraceable and restrictions on taxmen entering condominium units where many online sellers are based. 

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