Online sellers register with BIR the same way as physical stores, usually on Form 1901. Under RR 16-2023, e-marketplace operators and digital financial services providers withhold 1% on one-half of the gross remittances they pay to sellers, which works out to 0.5%. There is no withholding if your remittances stayed at ₱500,000 or less in the past year, or so far this year.[3,2]
Online sellers register like any business
BIR requires taxpayers to register once before they start their business, and self-employed individuals use Form 1901. Selling through an app or a social media page does not change that. If you use a business name, you need your DTI certificate for BIR registration.[3]
Registration also sets your tax types. Many online sellers with sales up to ₱3,000,000 choose the 8% income tax, which saves them from filing a quarterly percentage tax return. If you also earn a salary, the 8% is on all your sales, with no ₱250,000 reduction; see the 8% option. See online business registration for the city and DTI side.[4,5]
What RR 16-2023 does
BIR issued RR 16-2023 on 21 December 2023 to impose withholding tax on gross remittances that electronic marketplace operators and digital financial services providers make to sellers and merchants.[1]
The rate is 1% on one-half of the gross remittance for goods or services sold through the platform. "Gross remittance" excludes sales returns and discounts, separately billed delivery or shipping fees, and VAT collected by the platform and passed to the seller.[2]
Example: a seller of phone cases in Bulacan receives ₱800,000 in gross remittances from a marketplace in a year after passing the threshold. Half is ₱400,000, and 1% of that is ₱4,000 withheld, the same as 0.5% of ₱800,000.[2]
When no tax is withheld
The regulation lists exceptions. There is no withholding if the seller's annual total gross remittances for the past taxable year did not exceed ₱500,000, or while the cumulative gross remittances in the current taxable year have not yet exceeded ₱500,000. Sellers who are exempt from income tax or subject to a lower rate under a law or treaty are also covered, with proof given to the platform.[2]
Platforms usually ask sellers for a declaration or documents to apply an exception. Answer those requests in the seller center promptly; if you ignore them, the platform may withhold by default.
What to do with the amounts withheld
Download the withholding records your platform provides every month or quarter and keep them with your books. Ask your accountant or RDO how the withheld amounts are treated when you file your quarterly and annual returns, so you do not pay the same tax twice.
Keep issuing invoices for your sales even when the platform sends its own order confirmations. Your books should match the platform's remittance reports; a big gap between the two is the kind of thing that leads to questions.
RR 16-2023 at a glance
| Point | What the rule says |
|---|---|
| Who withholds | E-marketplace operators and digital financial services providers |
| Rate | 1% on one-half of gross remittances (0.5% effective) |
| Not included in gross remittance | Returns and discounts, separately billed shipping, VAT passed to the seller |
| No withholding if | Past year's remittances not over ₱500,000, or this year's so far not over ₱500,000 |
| Also exempt | Sellers exempt from income tax or on a lower rate, with proof |
Questions people ask
- Is the withholding tax 1% of my sales?
- No. It is 1% of one-half of gross remittances, which equals 0.5% of what the platform remits to you.
- I sell less than ₱500,000 a year. Will anything be withheld?
- Not if your past-year remittances did not exceed ₱500,000, or while this year's total has not yet passed ₱500,000.
- Do I still need to register with BIR if the platform withholds?
- Yes. Withholding does not replace registration. BIR requires every business to register before it starts.
- Does shipping count in the gross remittance?
- Not when the delivery or shipping fee is billed separately. Returns, discounts and VAT passed to the seller are also excluded.
Online seller to-do list
- Register with BIR on Form 1901 before you sell
- Upload your COR to each platform's seller center
- Answer platform requests for a ₱500,000 declaration if you qualify
- Download monthly withholding and remittance reports
- Issue invoices and keep books that match the reports
- Ask your accountant how to treat the withheld amounts
Sources
Checked 14 November 2026. We link the agency's own page for every requirement. Rules change; confirm with the office before you pay.
- 2023 Revenue Regulations · Bureau of Internal Revenue · 21 December 2023
- Digest of Revenue Regulations No. 16-2023 · Bureau of Internal Revenue · 21 December 2023
- Primary Registration · Bureau of Internal Revenue
- Income Tax · Bureau of Internal Revenue
- Revenue Memorandum Order No. 23-2018 · Bureau of Internal Revenue · 21 May 2018