Recently, according to the Philippines** report,The Philippine tax authority levies a 1% levy on half of the total remittance from merchants on e-commerce platformsWithholding Tax
Source: Global Compliance News
In simple terms,Pursuant to Revenue Regulation No. 16-2023 issued by the Philippine Internal Revenue Service (BIR) (hereinafter referred to as "Regulations), which sets out guidelines for the imposition of withholding tax on total remittances from electronic marketplace operators and digital financial services. All e-commerce sellersYou need to register with BIR to do business on the marketplace.
The ordinance came into effect 15 days after it was published in the Manila Gazette on December 27, 2023.
Specifically,The regulation is aimed at e-marketplace operators and digital financial service providers who sell payment goods or services through their platform facilities to pay for goods or services to sellers and merchantsOne half of the total amount of remittances(0 actually.)5%) is subject to a 1% withholding tax.
The regulation clearly stipulates that only to:LocalOnly the total amount remitted by the merchant is eligible for deductible withholding tax. All payments covered by remittance transfers should be made under the seller's merchant trade name registered with BIR.
Revenue regulations provideWithholding TaxAvailability:Sellers with an annual remittance totaling more than Php 500,000 Tax entities. Sellers whose income is equal to or below the threshold of a taxable entity mayExemptWithholding Tax。The minimum limit of PHP 500,000 will be spread across all stores under the same taxable entity. Once the cumulative revenue of all linked stores exceeds this threshold, the withholding tax will apply to all stores. The withholding tax under the Regulations is in addition to the existing withholding tax obligations of e-marketplace operators and digital service providers.
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All ** sellers must register with the IRS on or before the time they start their business on the marketplace. The regulation also directs marketplace operators to require their respective sellers to submit a Certificate of Registration (COR) or BIR ** No. 2303 as part of the minimum seller merchant certification requirements.
In this issue, we are fortunate to invite Zhong Jun, co-founder of Anhe Overseas to share his "common problems and experience in paying taxes in the Philippines".
1. Tax payment process:
When it comes to how Chinese merchants can have a tax number? ，Zhong JunintroducedThree methods:
Method 1Philippines Pure Personal Tax Number:Find a Filipino citizen,You need to have a temporary position in the Philippines, have a real salary statement, and get the tax ID registration certificate and BIR-2303 tax filing documents from the Philippine Tax Authority before you can use their information to file a tax return.
Method 2Philippine Self-employed Tax ID:Find a Filipino company. Use the real materials of the Philippine company to file the declaration, and each Philippine company has a (BIR) document, which is the Tax Certificate (BIR) 2303** issued by the Philippine Inland Revenue Service, which contains the materials that meet all the requirements of the platform for tax submission.
Method 3The tax identification number issued by the joint venture company(One Chinese foreigner and two Filipinos, with foreigners holding up to 40 percent of the shares in the Philippines and two Filipinos accounting for 60 percent.) ）How to apply for a Philippine company? Zhong Jun reminded that in addition to preparing the basic materials - passports, the following steps are required:
1. Business plan:Before starting to register a company, investors should develop a detailed business plan, including company positioning, business scope, market analysis, etc. This will help to clarify the direction and goals of the business.
2. Select the type of companyThe Philippines allows foreign investors to set up different types of companies, including sole proprietorships, partnerships, and shares***. Choosing the right company type is the first step to a successful registration.
3. Obtain a licenseSome industries require prior access to specific permits or licenses, such as food processing, financial services, etc. Investors need to be aware of the relevant regulations and ensure that the necessary permits are obtained.
4. Company name registration:After choosing a company name, investors need to register their name with the Philippine Securities and Exchange Commission (SEC). If the name has already been registered, you will need to choose another name.
5. Investor Registration:Foreign investors are required to register as an investor with the SEC in order to obtain an Investor Identification Number (TIN).
6. Tax registrationInvestors need to register with the Philippine National Revenue Service (BIR) to obtain a Taxpayer Identification Number (TIN).
7. Registered City**:Depending on where the company is located, investors will also need to register in the local city** to obtain a business license.
8. Bank account opening:During the incorporation process, a corporate account needs to be opened in a bank in the Philippines in order to handle the flow of funds and tax matters.
9. Apply for a business licenseSome regions may require additional operating licenses, and investors need to be aware of the local requirements and apply.
2. After obtaining the tax number, how to fill in it on the platform? (**shopee official).
Sellers need to update their tax information before April 14, and the specific process is detailed below
Figure: The 2303 return flyer shows that the payment status is successful.
On or after June 1, 2023The information provided by the registered seller at the time of registration will appear directly there"Tax Information"options. Please make sure you choose the right oneThe type of seller (Individual or Business)., otherwise it may not be possible to change it after submission. If you are unable to edit the uploaded tax information by yourself, please contact the platform customer service or manager in time.
The taxable time required by the tax office
Tax timeline for self-employed individuals:
The company's tax timeline:
From this,Shopee officially released a post about the Philippines on February 23Withholding TaxThe announcement of relevant precautions is as follows:
Sellers, please note that in order to maintain the fairness of tax obligations between brick-and-mortar stores and e-commerce merchants, the Philippine Revenue Authority (BIR) has established a tax revenue system in the following areasDecember 27, 2023IssuedInland Revenue Ordinance No. 16-2023. The regulation requires local e-commerce sellers to pay the total amount of salesof deductible withholding tax. In addition,All e-commerce sellersYou need to register with BIR to do business on the marketplace.How to calculateWithholding TaxThe calculation of withholding tax will be based on the seller's tax entityVAT registration type(VAT Registered or Non-VAT Registered) You can check your registration type in the BIR registration certificate. The withholding tax for each order is calculated as follows:
It is worth noting thatWithholding Tax1% is included in the 12% VATThe VAT payment rate is calculated based on the profit of the store. It can be understood as the difference, but the amount of expenditure must be proved by invoicing, such as purchase orders, logistics orders, goods invoices, as well as the platform's advertising fees, commissions and (2307) return information can be used to offset a certain amount of VAT.
Shopee will automatically issue BIR **2307 (Certificate of Tax Withholding Credit at Source) using the available seller information and will issue it every 20 days after the end of the taxable quarter. Visit and bir 2307. Sellers can use the tax credit for their actual payments.
Visit the official website of the Internal Revenue Service of the Philippines ** bir ** 2307 (you can also contact to pick it up):
There are currently three types of VAT that need to be paid:
a.3% business tax for self-employed individuals, DTI self-employed individuals; b.12% VAT for companies, ordinary sec joint-stock companies OPC individuals ***c12-20% service tax on the service sector, sec joint-stock companies in the service sector. Therefore, we have also prepared three questions for the details of the platform store and the consequences of non-payment**, Zhong Jun answered them respectively:
1. In terms of the number of stores registered and bound to the company, if it is bound in batches, will the tax paid be less? Zhong JunThe company registration platform pays taxes according to the number of store IDs. At present, TikTok Shop stipulates that individuals can only open 1 store, and enterprises can open 5 stores on one site. However, Shopee and Lazada do not explicitly stipulate the specific number, and at present, one entity can open multiple stores on the platform.
2. Can the old store be replaced with new information? Zhong Jun: Shopee and Lazada can update and change data through the background. However, TikTok is currently unable to change the information, unless the store is relatively large, find the corresponding AM manager to change the information. In addition, according to the feedback of sellers, the major platforms have not yet started to deduct taxes.
3. What are the consequences of not paying taxes?
After referring to Vietnam's relevant policies on tax arrears for e-commerce platform sellers, Zhong Jun may have the following three consequences: aFacing a freeze on funds; b.Deduct the tax first and give the seller a 2-3 month adjustment period; c.The store is closed and cannot sell products normally.