BIR's eyes on digital transactions
By Floyd Paguio
THE world of shopping is gradually shifting from malls to online stores. People who used to hang out at the mall now socialize over social media and through their smartphones. Mall boutique and stall owners are thus exploring more and more the opportunities of online selling. Furthermore, online platforms can accommodate a thousand more sellers than malls could.
With this development, the Bureau of Internal Revenue (BIR) has seen an opportunity that will contribute to the increase in its tax collections. Two new taxes will be introduced — a 1 percent withholding tax and a 12 percent value-added tax (VAT) to online sellers using an online platform provider that serves as an intermediary, where the seller and buyer of goods and services transact their business using information technology and other electronic means.
Left eye: 1 percent withholding tax
The existing Revenue Regulations 2-98 will be amended and will be out soon. This will require online platform providers to withhold 1 percent of one-half of the gross remittances to their partner-sellers and merchants. The new regulation also aims to require e-marketplace operators not to allow the sale of goods or services in the e-marketplace by online sellers who are not duly registered with the BIR, regardless of the gross remittance per year.
However, the withholding tax imposed will not apply if the annual gross remittances to an online merchant for the past taxable year have not exceeded P250,000.
Various comments received by the BIR from stakeholders include resistance to imposing new taxes, wherein the economy is still recovering from the pandemic. However, the BIR stressed that this is not a new tax being imposed but a mere implementation of an existing law. Note that tax withheld can be used by the online sellers to offset any income tax due that is computed and paid every quarter.
Anytime this month, the revised regulation will be out in time for the “spending season” or the Christmas season. This step will further raise the tax collection of the BIR in 2023. Reports from the Department of Finance showed that January-to-June state revenues climbed by 7.7 percent to P1.9 trillion.
Floyd C. Paguio, CPA, MBA, is the Chairman of Paguio, Dumayas & Associates, CPAs (PDAC), CPAs-PrimeGlobal Philippines. He is a former member of the board directors of the Acpapp and a trustee of the Acpapp Foundation.
The views and opinions in this article are the author's and do not represent those of these institutions.
Source: BIR's eyes on digital transactions