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The Philippine tax agency introduces a 1% withholding tax on one-half of the gross remittances of online platforms to online sellers/merchants.

In brief

The Bureau of Internal Revenue (BIR) recently issued Revenue Regulations No. 16-2023 (“Regulations“), which sets out the guidelines on the imposition of withholding tax on gross remittances by electronic marketplace (e-marketplace) operators and digital financial services providers to online sellers/merchants, in connection with goods and services sold or paid through the former’s platform/facility.

The Regulations take effect on 12 January 2024, or after 15 days from its publication in the Manila Bulletin on 27 December 2023.

In more detail

The Regulations impose a withholding tax of 1% on one-half (effectively, 0.5%) of the gross remittances by e-marketplace operators and digital financial services providers to the sellers/merchants for goods or services sold/paid through their platform/facility.

  • The term “gross remittance” covers the total amount received by an e-marketplace operator or digital financial services provider from a buyer/consumer for the goods and services sold by or paid to the seller/merchant through the platform/facility, excluding the following:
  1. Sales returns and discounts; separately billed delivery or shipping fee; and value-added tax, collected by the e-marketplace operator from the online consumer and subsequently remitted to the online seller
  2. Consideration for the use of the e-marketplace and/or digital financial services platform
  • Collections by an e-marketplace operator from the following payment arrangements are covered by the term “gross remittance”:
  1. Payment through the electronic wallet (e-wallet) of the e-marketplace operator being maintained by the online consumer
  2. Payment by the online buyer/consumer using the e-wallet feature of a digital financial services provider (e.g., mobile payment services, banking services or credit card) for the account of the e-marketplace operator
  3. Payment in cash that is personally collected from the buyers/consumers by persons or entities on behalf of the e-marketplace operator, and deposited or transferred to the account of the e-marketplace operator
  • The term “electronic marketplace” refers to a digital service platform whose business is to connect online buyers/consumers with online sellers/merchants; facilitate and conclude the sales; process the payment of the products, goods or services through such digital platform, or facilitate the shipment of goods or provide logistic services and post-purchase support within such platforms; and otherwise retain oversight over the consummation of the transaction.
  • Meanwhile, a “digital financial services platform” refers to the financial technology provided by digital financial services providers, which are made available to the public through the internet, mobile application, or other similar means.
  • The withholding tax will be imposed on remittances by digital financial services providers to sellers/merchants through its e-wallet feature or any other similar mode of payment, and on money transmission relating to the buyers’/consumers’ payment of the goods and services.
  • The obligation to withhold is imposed on the provider that processes the transactions on behalf of the seller/merchant (“Acquirer“) and not on the provider that holds or has the duty to safekeep the money or financial assets of a mobile payment service on behalf of the buyer/consumer (“Issuer“) in case the Acquirer and the Issuer are different digital financial services providers.

The Regulations clarify that only gross remittances to local sellers/merchants are covered by the imposition of the creditable withholding tax. All covered payments/remittances/transfers shall be under the BIR-registered tradename of the seller/merchant.

However, the imposition of withholding tax will not apply in the following instances:

  • The annual total gross remittances to an online seller/merchant for the past taxable year has not exceeded PHP 500,000.
  • The cumulative gross remittances to an online seller/merchant in a taxable year has not yet exceeded PHP 500,000.
  • The seller/merchant is duly exempt from or subject to a lower income tax rate pursuant to any existing law or treaty, upon securing the necessary proof of entitlement.

The withholding tax under the Regulations shall be in addition to the existing withholding tax obligations imposed on the e-marketplace operators and digital services providers.

Recommended actions

All online sellers/merchants must register with the BIR on or before the commencement of their businesses in an e-marketplace platform.

The Regulations also direct e-marketplace operators to require from their respective sellers/merchants the submission of their Certificate of Registration (COR) or BIR Form No. 2303, and to include the same as part of the minimum seller/merchant accreditation requirements.

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Kristine Anne Mercado-Tamayo is a partner and the head of Quisumbing Torres’ Tax Practice Group. She heads the Industrials, Manufacturing & Transportations Industry Group and is also a member of the Consumer Goods & Retail. She has 16 years of experience assisting and advising clients on tax issues relating to corporate restructuring and mergers and acquisitions. Kristine also handles customs and international trade matters, including border and post-clearance disputes. She advocates on clients' behalf in controversies involving disputed assessments, representing clients before the Bureau of Internal Revenue and the Bureau of Customs.
Kristine Anne obtained her Doctor of Law degree from the Ateneo de Manila in 2005. She is cited as a Next Generation Partner in Tax by the Legal 500 Asia Pacific for 2020 to 2023. More recently, she has been named highly regarded lawyer for General corporate tax, and Women in tax by ITR World Tax 2023.


Maria Ana Camila Jacinto-Lagustan is a partner in Quisumbing Torres’ Tax Practice Group and the head of the Automotive sector of the Industrials, Manufacturing & Transportation Industry Group of the Firm. She is also a member of the Healthcare & Life Sciences Industry Group. She has 14 years of experience advising clients on general tax planning, international tax, VAT and indirect taxes, tax controversy and litigation, customs and trade issues and procedures, and tax advisory and advocacy work.


Marc Christian M. Lopez is an associate in Quisumbing Torres' Tax Practice Group. Prior to joining the firm, he was an associate in a tax-specialized law firm where he primarily handled tax advocacy and litigation, commercial law and tax advisory, estate planning and settlement, and corporate restructuring matters. Marc obtained his Juris Doctor degree from the University of the Philippines Diliman College of Law in 2020 and was admitted to the Philippine bar in 2022.

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