The Bureau of Internal Revenue (BIR) said on Friday that it is sticking to the 90-day transitory period it gave e-marketplace operators and digital service providers to comply with the new withholding tax system for online sellers, at least for now.
That’s despite the appeal of some digital finance service providers to be given more time to update their operating systems so that they can implement the regulation as seamlessly as possible.
Under the BIR’s guidelines, the e-marketplace operator or digital service provider will be tasked to deduct the 1-percent withholding tax on sales made by online merchants.
According to Lito Villanueva, the founding chairman of Fintech Alliance.Ph, his members have asked for at least 180 days to make the necessary adjustments.
“Digital operations require meticulous review of the operating system and this includes identifying and mapping all necessary system changes from technology build to testing, ensuring deployments with minimal impact to customers because, otherwise, it will be done manually,” said Villanueva during the group’s general membership meeting.
“Second, existing agreements with merchants and partners need to be revised to align with regulatory prescriptions,” he added.
But BIR Commissioner Romeo Lumagui noted that during initial discussions with stakeholders, it was agreed upon that 90 days was already a sufficient amount of time.
“The 90-day period will end in April so we still have almost two months to go. So it could be probably premature to say that we still need time. Hopefully we all exert our efforts and time on this so we could fully implement this because every day really count,” he said during the same event.
Lumagui stressed the importance of collecting taxes from online sellers immediately because of the huge revenue loss the government is facing due to their non-compliance.
“That’s why we want to focus on this as early as possible so that we will be able to capture the entire system and be able to collect the taxes due. Our collection target for this year is P3 trillion which is (a) 16% increase over last year’s goal so we really need to raise the revenue,” he said.
BIR Revenue Regulation No. 16 imposes a 1-percent creditable withholding tax on one-half of the gross remittances made by e-marketplace operators and digital financial service providers to sellers or merchants.
Online shopping apps, food delivery apps, online hotel booking sites, transport service apps and e-wallet platforms like GCash and Maya are covered by this policy.
Small-scale online businesses are meanwhile exempted. (ABS-CBN News)
