BIR: Proposed 1% withholding tax on online sellers ‘not a new tax’

Amidcalls to reconsider its plan to impose a creditable withholding tax of 1% on the partner-merchants of online platforms, the Bureau of Internal Revenue (BIR) said the proposal is not a new tax as it is within existing tax laws.

“The proposal is a creditable withholding tax. So it’s not really a new tax. It’s just a mode of collecting,” BIR Commissioner Romeo Lumagui Jr. told reporters at the sidelines of The Economist Impact’s Global Anti-Illicit Trade Summit in Taguig City on Thursday.

The United Filipino Consumers and Commuters (UFCC) is urging the BIR to reconsider its plan, describing it as a “heavy blow” to “ordinary Filipino peo- ple who will suffer the effects of the new tax.”

In its proposal, the BIR is eyeing to impose a creditable withholding tax of 1% on one-half of the gross remittances of online platform providers to their partner sellers or merchants.

The taxman argued that with the proliferation of online sales transactions through the facilities of online platform providers, there is a need to take advantage of the opportunity to identify sell- ers of goods and services who are therefore obliged to declare their income resulting from these transactions for tax purposes.

The withholding tax is the amount withheld by a business in payments of goods or services which is directly remitted to the government on behalf of suppliers or employees.

“This is not a new tax. Just like the creditable withholding tax of employees, it’s not a new tax —the tax of employees is being withheld by employers,” Lumagui said.

Amid concerns on the proposal, the BIR chief said the taxman is open to comments and sugges-