The Bureau of Internal Revenue (BIR) issued Revenue Memorandum Circular (RMC) No. 8-2024 on January 15, 2024 to prescribe the timeline and implementation procedures of Revenue Regulations (RR) No. 16-2023 in compliance with Section 3 of the said RR, and to address the potential issues and concerns which may arise from implementation thereof.
Obligations of Sellers/Merchants
Under RR No. 16-2023, sellers/merchants are required to observe the following:
1. Register with the BIR
2. Submit a copy of the BIR-issued Certificate of Registration (COR) to the e-marketplace operator or DFSP prior to the use of the e-marketplace or DFSP facility. The said obligation in turn requires the e-marketplace facility and DFSPs to require the seller/merchant to submit the COR to them before allowing the said seller/merchant to use their e-marketplace facility.
3. Should the gross remittance received from the e-marketplace operators or DFSPs is determined and/or expected not to exceed the threshold of five hundred thousand pesos (Php500,000.00), the seller/merchant shall submit a Sworn Declaration (SD) duly received by the BIR in the form prescribed by RMC No. 8-2024 upon the application (or within the transitory period in case of existing participant sellers/merchants of e-marketplace operators and DFSPs) with e-marketplace or DFSP declaring that the total gross remittance to be received from the e-marketplace operators or DFSPs shall not exceed five hundred thousand pesos (Php500,000.00). The BIR-received SD shall be submitted thereafter on or before the 20th day of the first month of each taxable year.
4. If a seller/merchant is exempt from income tax or subject to a lower income tax rate pursuant to any existing law or treaty, the seller/merchant shall submit a duly issued certification, clearance, ruling, or any other document as proof to the e-marketplace operator or DFSP of such exemption or entitlement.
Failure to submit the prescribed SD
Regardless of the failure to submit the prescribed SD, 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.
Should the gross remittances exceed five hundred thousand pesos (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.
Transitory Period
The BIR clarified in the RMC that the e-marketplace operators and DFSPs are allowed ninety (90) days from the date of the RMC’s issuance to comply with the relative policies and 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.
Obligations of E-marketplace Operators and DFSPs
The RMC issued by the BIR likewise clarified the following obligations of e-marketplace operators and DFSPs under RR No. 16-2023:
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 Sworn Declaration. 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.
Furthermore, RMC No. 8-2024 states that 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.
The RMC also elucidated that 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 the same to the seller/merchant shall be liable to withhold the taxes under RR No. 16- 2023.
References:
[1] Revenue Regulations No. 16-2023
[2] Revenue Memorandum Circular No. 8-2024
Authors:
Atty. Renuel Napiere
Atty. Graham Ragsac