On Apr. 20, PHI Tax amended rules for online platforms creditable tax.
PHI Tax proposed amendments to the provisions of Regulation no. 2-98 to impose creditable withholding tax on income payments made by online platform providers.
Background
Amendments were prompted by the increase of sales transactions on online platforms.
It aims to clearly prescribe obligations of the online platform providers under the proposed regulation, which is in addition to their existing withholding tax obligations.
Proposed Amendments
Proposals include adding definitions for online platform providers and remittances.
Impose a creditable withholding tax of one percent (1%) on one-half of the gross remittances of the online platform providers, to the sellers of the goods and services.
If online platform provider does not require business registration of seller of services, the withholding tax imposed will be deducted and remitted per the specified cases.
All rules inconsistent with the provisions of these regulations are amended or repealed.
Consultation End
Stakeholders can submit comments via email until May 2, 2023.
The regulations shall take effect 15 days following publication in any newspaper.
Oct. 2023 Further Revisions
On Oct. 20, 2023, PHI Tax proposed revisions to Regulation no. 2-98 to impose creditable withholding tax on gross remittances by electronic marketplace operators.
Revisions include imposing 1% creditable withholding tax on 50% of gross remittances by e-marketplace operators to online merchants, except specified instances.
Definitions, examples of gross remittances and electronic marketplaces are presented.
Withholding tax imposed shall cover remittances by mobile payment services for payment of goods/services purchased by a consumer from physical stores, where a depository bank of the mobile payment service is same with an acquiring bank.
E-marketplace operators shall not allow sales of goods/services in the e-marketplace by online sellers who are not duly registered with PHI Tax.
Comments shall be submitted via email no later than Oct. 27, 2023.
In Nov. 2023, PHI Tax issued amendments regarding withholding tax, see #191564.
Dec. 2023 Regulations Issued
On Dec. 21, 2023, PHI Tax made Revenue regulations no. 16-2023 regarding proposed platforms withholding tax consult above, these regs comes into effect 15 days post publication in official gazette or newspaper of general circulation, whichever earlier.
Therefore, if duly published Dec. 21, they would come into effect on Jan. 4, 2023.
These regs include some variations to the proposal i.e. to list of specified exceptions.
In addition, these regs were broadened to apply to digital financial services providers.
Includes definition of digital financial services platform as well - this shall refer to the financial technology provided by digital financial services providers which are capable of offering wide array of services of financial nature that are made available to public.
Specifically, through the internet, mobile application, or other similar means.
Including banking services; insurance as well as insurance-related services; payment as well as money transmission services; along with other similar or related services.
In addition, includes a transitory provision, which provides PHI Tax will issue revenue memo setting out implementation procedures as well as timeline for this purpose.
Document dated Dec. 21, 2023, received from PHI Tax Dec. 28, summarized Jan. 1, 2024.
Jan. 2024 Alphanumeric Tax Code
On Jan. 19, 2024, PHI Tax created a new alphanumeric tax code, effective on same day.
To facilitate identification/monitoring of creditable withholding tax payment of on gross remittance made by electronic marketplace operator/digital electronic service provider.
Document dated Jan. 19, 2024, received from PHI Tax Feb. 6, summarized on Feb. 8.
Apr. 2024 Extension for Compliance
On Apr. 16, 2024, PHI Tax said Revenue memorandum circular no. 55-2024 (of Apr. 15) extended transition period by adding 90 more days for compliance, or until Jul. 14.
PHI Tax explained that the extension was made after considering the private sector's request with respect to implementing Revenue regulations no. 16-2023 above.
Jul. 2024 Implementation
On Jul. 15, 2024, PHI Tax reiterated imposition of withholding tax to sellers/merchants by electronic marketplace operators starting Jul. 15, 2024; no further extension given.
For digital financial services providers, the transitory period is further extended until Oct. 12, 2024, to provide additional time for them to complete system adjustments.
Document dated Jul. 15, 2024, received from PHI Tax Jul. 16, summarized on Jul. 19.
