As Featured on Philstar: Digital times call for digital measures

The Bureau of Internal Revenue (BIR) has recognized the undeniable rise of digital commerce in the Philippines by promulgating Revenue Regulations (RR) No. 16-2023, issued on 21 December 2023, and Revenue Memorandum Circular (RMC) No. 08-2024, issued on 15 January 2024, respectively. The former amends RR No. 02-98 while the latter establishes the implementation of RR No. 16-2023, which took effect on 11 January 2024.

How, then, do these BIR issuances affect digital commerce? The answer lies in the imposition of one percent (1%) Withholding Tax on one half (1/2) of the gross remittances of electronic marketplace operators and digital financial services providers (DFSPs) to sellers or merchants for the goods and services sold or paid through the operator’s platform or facility. However, this imposition admits of certain exceptions, as follows:

  1. If the annual total gross remittances to online sellers or merchants for the past taxable year have not exceeded PHP 500,000.00; or
  2. If the cumulative gross remittances to online sellers or merchants in a taxable year have not yet exceeded PHP 500,000.00; or
  3. If the seller or merchant is duly exempt from or subject to a lower income tax rate pursuant to any existing law or treaty. For this exception to apply, the concerned sellers or merchants should secure and submit to the e-marketplace operator or DFSP concerned the necessary certification, clearance, ruling, or other documentary proof of its entitlement to the said exemption or lower income tax rate. 


RMC No. 08-2024 further clarifies that the gross remittances of PHP 500,000.00 shall consist of the total amount of remittances received by the online sellers or merchants from all e-marketplace operators and DFSPs. The prescribed withholding tax shall first be automatically deducted from the remittance exceeding the PHP 500,000.00 threshold, and then deducted on the subsequent remittances.

RR No. 16-2023 also designates the e-marketplace operator and DFSPs as the withholding agents. Additionally, these obligations are imposed upon e-marketplace operators and DFSPs:

  1. Ensure that all sellers or merchants applying for the use of the e-marketplace or DFSP platforms are registered with the BIR by requiring the submission of their BIR Certificate of Registration.
  2.  Require sellers or merchants who are duly exempt from or subject to a lower income tax rate to submit the necessary certifications or proof of such entitlement.
  3. Require sellers or merchants to submit a copy of the BIR-received Sworn Declaration.
  4. Monitor the gross payments of buyers or customers and deduct the withholding tax before remitting the payments to the concerned sellers or merchants.
  5. Timely provide sellers or merchants with the Certificate of Creditable Tax Withheld at Source.


Conversely, sellers or merchants must observe the following obligations:

  1. Register their business with the BIR and submit a copy of their BIR Certificate of Registration as a requirement by the e-marketplace operator before using the e-marketplace facility.
  2. If the gross remittance determined and/or expected to be received by the sellers or merchants from the e-marketplace operators or DFSPs does not exceed the PHP 500,000.00 threshold, they must also submit to the e-marketplace operators or DFSPs a Sworn Declaration (SD) attesting to such fact on or before the 20th day of the first month of each taxable year.
  3. If they are exempt or subject to a lower income tax rate, they must also submit to the e-marketplace operators a duly issued certification as proof of their entitlement.


Fortunately, e-marketplace operators, DFSPs, and sellers or merchants are given ninety (90) days from the issuance of RMC No. 08-2024 to comply.

Meanwhile, the Internet Transactions Act of 2023 (ITA) was signed into law on 5 December 2023.  In a digital nutshell, the ITA seeks to further regulate e-commerce in the form of the establishment of the eCommerce Bureau, to be created under the DTI, and of an Online Business Database (ODB). The ITA also grants the DTI with regulatory jurisdiction as to the use of the internet for conducting e-commerce. The DTI’s regulatory jurisdiction would only be ancillary and would not deprive other regulatory agencies of their own regulatory jurisdiction.

In addition to obligations imposed by the BIR based on withholding tax, online sellers or merchants and e-marketplace operators are also subject to obligations imposed by the ITA:

Under Section 21 of the ITA, marketplaces must:

  1. Ensure that internet transactions on their platforms are clearly identifiable as e-commerce transactions, identify the person/s on whose behalf the e-commerce transaction is made and identify any promotional offer and the conditions required to qualify for such offers are accessible, clear and unambiguous.
  2. Require all online merchants to submit certain documentary requirements prior to their listing in the platforms.
  3. Maintain a list of all online merchants registered under their platform, to be updated and verified regularly.
  4. To always protect the data privacy of consumers.
  5. Prohibit the sale of regulated goods unless the necessary permits and licenses are provided, along with compliance with relevant sale procedures, limitations and conditions.
  6. Provide an effective and responsive redress mechanism for online consumers and merchants.
  7. Require all online merchants to clearly indicate the name, brand, price, description and condition of goods and services they offer online.


Meanwhile, E-retailers and online merchants must:

  1. Indicate the price of goods and services offered consistent with R.A. 7394.
  2. Ensure that the goods are received by the consumer, as described, stated, specified, communicated and as advertised.
  3. E-retailers must publish on its homepage its identifying details.
  4. To always protect the data privacy of consumers.
  5. Issue paper or electronic invoices or receipts at all times.
  6. Provide an accessible and efficient redress mechanism for handling complaints from their clients.

Verily, persons or entities engaged in e-commerce must be mindful of these developments as they provide obligations that must be followed. The proponents of the issuances should be commended for taking concrete steps in further regulating the digital marketplace and in seeking new ways to generate revenue for the National Government.

Christelle Ann T. Torio
Tax Supervisor
KPMG in the Philippines

Christelle Ann T. Torio is a Supervisor from the Tax Group of KPMG in the Philippines (R.G. Manabat & Co.), a Philippine partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. The firm has been recognized as a Tier 1 in Transfer Pricing Practice and in General Corporate Tax Practice by the International Tax Review. For more information, you may reach out to Tax Supervisor Christelle Ann T. Torio or Tax Principal Kathleen L. Saga through, social media or visit

This article is for general information purposes only and should not be considered as professional advice to a specific issue or entity. The views and opinions expressed herein are those of the author and do not necessarily represent KPMG International or KPMG in the Philippines.