BIR Issuances – RMC 8-2024

The BIR clarifies the provisions of Revenue Regulations (RR) No. 16-2023 imposing Withholding Tax on Gross Remittances made by Electronic Marketplace Operators and Digital Financial Services Providers (DFSP) to Sellers/Merchants.

 

Revenue Memorandum Circular (RMC) No. 8-2024

15 January 2024

RR No. 16-2023 impose a WITHHOLDING TAX on gross remittances made by electronic marketplace (e-marketplace) operators and digital financial services providers (DFSP) to sellers/merchants.

PUBLICATION

RR No. 16-2023 was first published in Manila Bulletin on December 27, 2023.

EFFECTIVITY

RR No. 16-2023 shall take effect on JANUARY 11, 2024 or after fifteen (15) days following its publication in a newspaper of general circular or the Official Gazette, whichever comes first.

TRANSITORY PERIOD

The e-marketplace operators and DFSPs are allowed a period of ninety (90) days from the date of issuance of this Circular to comply with the relative policies or requirements of other government agencies, if any, and to give them an opportunity to adjust and properly comply with the provisions of RR No. 16-2023 prior to the actual imposition of the prescribed creditable withholding tax.

Further, existing unregistered sellers/merchants shall comply with the applicable requirements enumerated in Q4-A4 of this Circular within the same prescribed period.

TAXABLE GROSS REMITTANCES

The gross remittances of Php500,000.00 shall consist of the total amount of remittances received by the online seller/merchant from ALL e-marketplace operators and DFSPs.

In case any of the e-marketplace operators and DFSP has determined that the GROSS REMITTANCES in its online platform EXCEEDS PHP500,000.00 anytime during the taxable year, the prescribed withholding tax shall be automatically deducted from the particular remittance exceeding the said threshold and the same shall be imposed on subsequent remittances.

SWORN DECLARATION (SD) OF GROSS REMITTANCES

If the gross remittances received from the e-marketplace operators or DFSPs is determined and/or expected not to exceed the threshold of Php500,000.00, submit a Sworn Declaration (SD) duly received and in the form prescribed by the BIR upon application (or within the transitory period for existing participant sellers/merchants) with e-marketplace or DFSP declaring that the total gross remittance to be received from the e-marketplace operators or DFSPs shall not exceed Php500,000.00.

The BIR-received SD shall be submitted thereafter on or before the 20^th day of the first month of each taxable year.

Should the gross remittance exceed the Php500,000.00 at any time during the taxable year, the prescribed BIR-received SD shall be immediately submitted to the e-marketplace operators or DFSPs by the sellers/merchants.

FAILURE TO SUBMIT SWORN DECLARATION

Regardless of the actual total income or gross remittance, the withholding tax imposed by RR No. 16-2023 shall automatically be deducted by the e-marketplace operator or DFSP.

OBLIGATIONS OF SELLERS/MERCHANTS

Sellers/Merchants are required to observe the following:

1. Register their business with the BIR and submit a copy of the BIR-issued Certificate of Registration as part of the documentary requirements by e-marketplace operator prior to the use of the e-marketplace facility.

2. If a seller/merchant is exempt from income tax or subject to a lower income tax rate pursuant to any existing law or treaty, submit a duly issued certification to the e-marketplace operator as proof of exemption or entitlement to a lower tax rate pursuant to the provisions of Section 2 of RR No. 16-2023.

UNREGISTERED SELLERS/MERCHANTS

All existing sellers/merchants selling goods and services in an e-marketplace not yet BIR-registered shall register their business with BIR pursuant to the National Internal Revenue Code of 1997, as amended.

After the transitory period, e-marketplace operators and DFSPs shall not allow unregistered business to sell goods and services in their platform/facility.

OBLIGATIONS OF E-MARKETPLACE OPERATORS AND DFSPs

E-marketplace operators and DFSPs are required to observe the following:

1. Ensure that all sellers/merchants applying for the use of the e-marketplace or DFSP platforms are registered with the BIR by requiring the submission of their Certificate of Registration (BIR Form No. 2303) prior to allowing sellers/merchants to use the e-marketplace facility or DFSP platform, as the case may be.

2. Require sellers/merchants who are duly exempt from or subject to a lower income tax rate pursuant to any existing law or treaty to submit the necessary certification or any other document as proof of entitlement to the said exemption or lower income tax rate.

3. Require sellers/merchants to submit a copy of the BIR-received SD. In case the sellers/merchants failed to submit the BIR-received SD, regardless of the actual income or gross remittances, the withholding tax shall be automatically deducted under RR No. 16-2023.

Further, when the seller/merchant failed to submit the required BIR-received SD to the e-marketplace operator or DFSP within the prescribed period, the withholding tax shall likewise be automatically deducted.

4. Monitor the gross payments of buyers/customers and deduct the withholding tax prescribed under RR No. 16-2023 before subsequently remitting the same to the concerned sellers/merchants.

5. Provide sellers/merchants the Certificate of Creditable Tax Withheld at Source (BIR Form No. 2307) within the period prescribed under the Tax Code, and other relevant revenue issuances, or upon request by the sellers/merchants.

COMMENCEMENT OF WITHHOLDING TAX OBLIGATION

The withholding tax obligation shall commence:

1. Upon receipt by the e-marketplace operator and DFSP of the BIR-received SD indicating that the seller/merchants have exceeded the Php500,000.00; or

2. When the seller/merchant failed to submit the required BIR-received SD to the e-marketplace operator or DFSP within the prescribed period; or

3. When the e-marketplace operator or DFSP has determined that its total gross remittances to the concerned seller/merchant have exceeded the Php500,000.00 threshold.

ARE SELLERS/MERCHANTS ALLOWED TO RECEIVE PAYMENTS THROUGH THEIR PERSONAL/INDIVIDUAL ACCOUNTS INSTEAD OF A BUSINESS ACCOUNT?

1. The sellers/merchants are not allowed to receive payments through their personal/individual accounts. In all payments/remittances/transfers covered under RR No. 16-2023, the seller/merchant’s account shall, AT ALL TIMES, be under the BIR-registered tradename of the seller/merchant.

BIR FORM AND ALPHANUMERIC TAX CODE (ATC)

The e-marketplace and DFSPs shall file and use the BIR Form Nos. 0619-E for the first two (2) months of the quarter and a revised 1601-EQ for the last or third (3^rd) month of the quarter which is inclusive of the additional ATC for creditable withholding tax imposed by RR No. 16-2023 shall be issued through another RMC.

PENALTIES

The violation of any of the provisions of RR No. 16-2023 shall be subject to appropriate penalties under the Tax Code, relevant laws, rules and regulations.

Copy of the RMC and Sworn Declaration of Gross Remittances can be accessed below.