Tax Alert No. 5 [Revenue Memorandum Circular (RMC) No. 8-2024 dated 15 January 2024]

Clarifying the Provisions of Revenue Regulations No. 16-2023 Imposing Withholding Tax on Gross Remittances Made by Electronic Marketplace Operators and Digital Financial Services Providers to Sellers/Merchants

Please be informed that the Commissioner of Internal Revenue has issued RMC No. 8-2024, dated 15 January 2024, clarifying the further amendments introduced by Revenue Regulation (RR) 16-2023 which amended provision of RR No. 2-98 imposing withholding tax on gross remittances made by electronic marketplace operators and digital financial services providers to sellers/merchants for goods and services through the former’s platform facility. 

RR 16-2023 essentially: (i) imposed and prescribed the withholding tax rates applicable on gross remittances of  electronic marketplace operators and digital financial services providers to sellers/merchants for the goods and services sold/paid through their platform/facility; (ii) defined “gross remittance,” “Electronic Marketplace,” “Sellers/Merchants,” “Digital Financial Services Platform (DFSP);”  and (iii) updated the designated persons required to deduct and withhold, which now covers e-marketplace operator or digital financial services providers. 

In turn, RMC 8-2024, issued the corresponding guidelines prescribing the timeline and implementation procedures of the foregoing regulation in compliance with Section 3 thereof and addressed the potential issues and concerns which may arise during its implementation.  

The e-marketplace operators and DSFPs are allowed a period of ninety days from the date of issuance of the RMC to comply with the relative policies or requirements of other government agencies, if any, and to give them an opportunity to adjust and properly comply with the provisions of RR 16-2023 prior to the actual implementation of the prescribed creditable withholding tax.

You may access the full version of the relevant issuances through the BIR website.

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