RMC No. 8-2024 — Clarifying the provisions of Revenue Regulations No. 16-2023 imposing Withholding Tax on gross remittances made by electronic marketplace operators and digital financial services providers to sellers/merchants Digest | Full Text | Annex A

BUREAU OF INTERNAL REVENUE REPUBLIC OF THE PHILIPPINES DEPARTMENT OF FINANCE National Office Building Quezon City BURE HTT JNTERNALREVENUE ELHMGT.DIVISION {4}D PW JAN 15 2720 EYN

HEAN 1 5 2024

REVENUE MEMORANDUM CIRCULAR NO. 8-2024

SUBJECT Clarifying the Provisions of Revenue Regulations No. 16-2023 Imposing Withholding Tax on Gross Remittances Made by Electronic Marketplace Operators and Digital Financial Services Providers to Sellers/Merchants

TO All Internal Revenue Officers and Others Concerned

Revenue Regulations (RR) No. 16-2023, which further amended RR No. 2-98, was issued to impose a withholding tax on gross remittances made by electronic marketpiace (e-marketplace) operators and digital financial services providers (DFSP) to sellers/merchants.

implementation procedures of RR No. 16-2023 in compliance with Section 3 of the said RR, and to This Circular is hereby issued for the guidance of all concerned to prescribe the timeline and

address the potential issues and concerns which may arise from the implementation thereof.

Q1 :When is the effectivity of RR No. 16-2023?

A Pursuant to Section 6 of RR No. 1 6-2023, the withholding tax obligation of e-marketplace 2023 shall take effect on January 11, 2024. operator and DFSPs shall take effect after fifteen (15) days following its publication in a 2023 was first published in Manila Bulletin on December 27, 2023. Thus, RR No. 16- newspaper of general circular or the Official Gazette, whichever comes first. RR No. 16-

Q2 Is there a transitory period?

A2 Yes. The e-marketplace operators and DFSPs are allowed a period of ninety (90) days of this Circular within the same prescribed period. requirements of other government agencies, if any, and to give them an opportunity to imposition of the prescribed creditable withholding tax. Further, existing unregistered sellers/merchants shall comply with the applicable requirements enumerated in Q4 - A4 from the date of issuance of this Circular to comply with the relative policies or adjust and properly comply with the provisions of RR No. 16-2023 prior to the actual

Q3 seller/merchant for purposes of not subjecting it from the prescribed creditable What constitutes the annual total gross remittances of P500,000.00 to an online withholding tax?

A3 : The gross remittances of P500,000.00 shall consist of the total amount of remittances determined that the gross remittances in its online platform exceeded P500,000.00 anytime during the taxable year, the prescribed withholding tax shall be automatically deducted provided, however, that, in case any of the e-marketplace operators and DFSPs has received by the online seller/merchant from ALL e-marketplace operators and DFSPs;

from the particular remittance exceeding the said threshold and the same shall be imposed on subsequent remittances.

Q4 What are the obligations of sellers/merchants under RR No. 16-2023?

A4 Sellers/Merchants are required to observe the following:

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

taxab le year. Sworn Declaration (SD) duly received by the BIR and in the form prescribed in Annex participant sellers/merchants of e-marketplace operators and DFSPs) with e- If the gross remittance received from the e-marketplace operators or DFSPs is "A" of this Circular upon application (or within the transitory period in case of existing marketplace or DFSP declaring that the total gross remittance to be received from the e-marketplace operators or DFSPs shall not exceed P500,000.00. The BIR-received SD shall be submitted thereafter on or before the 20th day of the first month of each determined and/or expected not to exceed the threshold of P500,000.00, submit a

In case of failure to submit the prescribed SD, regardless of the actual total income or be deducted by the e-marketplace operator or DFSP. gross remittance, the withholding tax imposed by RR No.16-2023 shall automatically

year, the prescribed BIR-received SD shall be immediately submitted to the e- marketplace operators or DFSPs by the sellers/merchants. Shouid the gross remittances exceed the P500,000.00 at any time during the taxable

Hlustration:

Taxable year is from January to December 2024.

In March 2024 (the month of application or within the transitory period for existing participant seller/merchant), a BIR-received SD is submitted by the seller/merchant to the e-marketplace operators and DFSPs declaring that the threshold is determined (from previous year) and/or expected (current year) to not exceed P500,000.00. Consequently, all gross remittances starting March 2024 will not be subjected to withholding tax.

E 1 15 2024 J R Px TE NALREVE URE T 2.57.2(X) of RR No. 2-98, as amended by RR No. 16-2023. to the e-marketplace operators and DFSPs declaring such and withholding shall commence. On January 20, 2025, withholding of taxes continues and there is no need to submit a BIR-received SD considering that it qualifies under Section However, in August 2024, it was determined by the seller/merchant that the gross remittances exceeded the threshold, hence, a BIR-received SD indicating that the gross remittances exceed P500,000.00 shall be submitted by such seller/merchant

VO January 20, 2026 to the e-marketplace operators and DFSPs a BIR-received SD taxable year 2026 will not be subjected to withholding tax. If it was determined that the total gross remittances for taxable year 2025 to the seller/merchant have not exceeded the threshold, it shall submit on or before declaring that the threshold is determined (from previous year) and/or expected (current year) to not exceed P500,000.00. Therefore, all gross remittances during

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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- to the provisions of Section 2 of RR No. 16-2023, which states: marketplace operator as proof of exemption or entitiement to a lower tax rate pursuant

(c) if the seller/merchant is duly exempt from or subject to a lower income concerned. proof of entitlement shall be submitted by the seller/merchant to the tax rate pursuant to any existing law or treaty. Provided that, the concerned seller/merchant is able to secure the necessary certification. clearance, ruling, or any other document serving as. proof of e-marketplace operator or digital financial services provider entitlement to the said exemption or lower income tax rate. The said

Q5 Are existing unregistered sellers/merchants selling goods and services in an marketplace or DFSP required to register with BIR?

A5 BIR-registered shall register their businesses with BIR pursuant to the National Internal prescribed under this Circular, e-marketplace operators and DFSPs shall not allow unregistered businesses to sell goods and services in their platform/facility. Yes. All existing sellers/merchants selling goods and services in an e-marketplace not yet. Revenue Code of 1997, as amended (Tax Code). Moreover, after the transitory period

Q6 What are the obligations of e-marketplace operators and DFSPs under RR No. 1

2023?

A6 E-marketplace operators and DFSPs are required to observe the following:

1. Ensure that all sellers/merchants applying for the use of the e-marketpiace 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 income or gross remittances, the withholding tax shall be automatically deducted sellers/merchants failed to submit the BIR-received SD, regardless of the actual under RR No. 16-2023.

JAN 15 2124 INTERT F the e-marketplace operator or DFSP within the prescribed period, the withholding tax shall likewise be automatically deducted. Further, when the seller/merchant failed to submit the required BIR-received SD to

DV}SION 1 T K 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.

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.

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Q7 When will the withholding tax obligation of the e-marketplace operator and DFSP commence in cases where the accumulated gross remittances to a seller/merchant exceed the prescribed P500,000.00 threshold?

A7 The withholding tax obligation shall commence:

1. Upon receipt by the e-marketplace operator and DFSP of the BIR-received SD indicating that the sellers/merchants have exceeded the P500,000.00; 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 P500,000.00 threshold.

Q8 Are sellers/merchants allowed to receive payments through their personal/individual accounts instead of a business account?

A8 No. The sellers/merchants are not allowed to receive payments through their

tradename of the seller/merchant. The BIR shall monitor usage of account under the registered tradename of the seller/merchant. 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

I t 1... AN 15 27 Q9 4 Gr to be bought. Mr. Mark purchased the goods at the store and delivered the same to Ms. Glyza. She paid the cost of goods, the delivery fee and purchase service fee in Ms. Glyza booked a purchase service in the Go Movers mobile application and set the Iocation of the store as the pick-up point and her location as the drop-off point. cash directly to Mr. Mark. Mr. Mark is a rider of Go Movers, a platform for carriage of goods: and merchandise. Go Movers offers a purchase service wherein their rider will buy and She messaged Mr. Mark, the assigned rider for her booking, with the list of goods pay for the goods and deliver the same to the buyer. Upon delivery, the buyer will pay the cost of goods and delivery fee and purchase service fee, if any, directly to the rider.

Is this scenario subject to withholding tax under RR No. RR 16-2023?

A9 This scenario is not subject to withholding tax considering that Go Movers did not collect

received the payment from the buyer only upon the delivery of the goods. payment to the seller or store. Rather, Mr. Mark advanced the payment to the store and the payment of the buyer, in behalf of the seller; hence, the platform does not remit income

the same to the seller, this shall be subject to withholding pursuant to RR No. 16-2023 the seller. In case the e-marketplace platform accepts or coilects payment for the goods and remits where withholding tax shall be deducted before its remittance of the income payment to

Q10: account and utilize the cash value to settle payments. CashLess is a digital financial services provider where users deposit funds into their

Mr. Daniel uses CashLess to settle his monthly electric bills payable to Light Supply, an electricity provider company. Light Supply is listed as a merchant at CashLess

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Daniel uses his funds at CashLess to settle his bills. where users may settle their electric bills using CashLess online platform. Mr.

to accredited billers/merchants. CashLess has contracted PayNow as its payment aggregator/facilitator of payments

pursuant to RR No. 16-2023? Who shall deduct the withholding tax before remittance to the seller/merchant

A10: In the event that the payment is transmitted to the seller/merchant through different facilities, the last facility which has control of the payment before completely remitting 2023 the same to the seller/merchant shall be liable to withhold the taxes under RR No. 16- 2023. In this case, only the remittance of payment from PayNow (payment aggregator) to Light Supply (the seller/merchant) shall be subject to withholding tax under RR No. 16-

Ql1: What BIR form and AIphanumeric Tax Code (ATC) shall be filed and used by e marketplace operators and DFSPs?

All: BIR Form Nos. 0619-E for the first two months of the cjuarter and a revised 1601-EQ for

RMC. the last or third month of the quarter which is inclusive of the additional ATC for' creditable withholding tax imposed by RR No. 16-2023 shail be issued through another

Q12 * What are the penalties in case of violation of any of the provisions of RR No. 16.

2023?

A12: 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.

Circular as wide publicity as possible. All internal revenue officials, employees and others concerned are hereby enjoined to give this :*

ssioner of Internal Revenue

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BUREETOF INTERNALREVENUE YENEYYYN 4l0 6 jAN 1 5 20?4

RECGnUS MGr DIVISION

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