The Bureau of Internal Revenue (BIR) has recently issued Revenue Memorandum Circular RMC No. 79-2024, which introduces important updates for online sellers and digital financial services providers (DFSPs). This circular extends the transitory period for DFSPs to comply with the new withholding tax regulations until October 12, 2024.
Key Points of RMC No. 79-2024
1. Extension for DFSPs
Digital financial services providers now have until October 12, 2024, to adjust their systems and comply with the withholding tax requirements. This extension aims to give DFSPs additional time to ensure they can accurately deduct and remit the required taxes.
2. Immediate Compliance for E-Marketplaces
E-marketplace operators, however, must start imposing the withholding tax on sellers and merchants from July 15, 2024. This means that any transactions made through these platforms will be subject to the new tax rules without further delay.
3. Withholding Tax Details
According to Revenue Regulations (RR) No. 16-2023, both e-marketplace operators and DFSPs are required to withhold a tax rate of 1% on one-half of the gross remittances made to sellers or merchants. This tax is creditable, meaning it can be used to offset the seller’s income tax liability.
4. Seller Registration
All sellers and merchants using these platforms must be registered with the BIR. They need to submit their Certificate of Registration (BIR Form No. 2303) and other necessary documents to prove their tax status.
5. Monitoring and Compliance
E-marketplace operators and DFSPs are responsible for monitoring gross payments, deducting the appropriate withholding tax, and providing sellers with withholding tax certificates (BIR Form No. 2307).
Implications for Online Sellers and DFSPs
This new regulation aims to ensure that all online transactions are properly taxed, promoting fairness and compliance within the digital economy. For online sellers, it is crucial to register with the BIR and comply with the new requirements to avoid any penalties or disruptions in their business operations.
For DFSPs, the extended deadline provides a much-needed buffer to make necessary adjustments and ensure full compliance with the new tax rules. However, they must use this time effectively to avoid any further extensions or penalties.
Overall, RMC No. 79-2024 represents a significant step towards modernizing the tax system and ensuring that digital transactions are adequately taxed. With Account It Right, this tax system modernization won’t be an issue. We specialize in handling small to medium enterprises and freelance accounts, customizing our services to their needs without breaking the bank. Request for a quote to know how we can help you thrive.
Sources: BDB Law | Newsbytes.ph