Starting January 11, 2024, e-marketplaces and digital financial service platforms such as RUSH Technologies must withhold 1% tax on 50% of cumulative annual gross remittances that amount to more than PhP 500,000.00. It shall cover all e-commerce payouts beginning the 2024 fiscal year, and with full compliance observed by March 26, 2024. This is according to the new Revenue Regulation (RR) 16-2023 of the Philippine Bureau of Internal Revenue (BIR).
Why is RUSH and its merchants affected? As per BIR definition below, RUSH Technologies is an e-marketplace operator:
For clarity, the following terms shall have the meaning:
- ‘Electronic Marketplace’ shall refer to a digital service platform whose business is to connect online buyers/consumers with online sellers/merchants, facilitate and conclude sales, process the payment of the products, goods or services through such digital platform, or facilitate the shipment of goods or provide logistic services and post-purchase support within such platforms, and otherwise retains oversight over the consummation of transaction, such as, but not limited to the following:
a. marketplace for online shopping;
Source: BIR Revenue Regulations 16-2023
What will be subjected to the 1% withholding tax on 50% of cumulative annual gross remittances?
All remittances made from RUSH to its merchants, less our fees, will be subject to the 1% withholding tax as described below:
The term ‘gross remittance’ shall refer to the total amount received by an e-marketplace operator or digital financial services provider from a buyer/consumer for the goods and services sold by or paid to the seller/merchant through the platform/facility of the e-marketplace operator or digital financial services provider, excluding the following:
a: sales returns and discounts; separately billed delivery or shipping fee; and value added tax, collected by the e-marketplace operator from the online consumer and subsequently remitted to the online seller; and
b: consideration for the use of the e-marketplace and/or digital financial services platform.
Source: BIR Revenue Regulations 16-2023
RUSH (as an electronic marketplace platform provider) shall immediately implement this new regulation. As such, we shall be withholding a 1% tax rate from one-half of the total gross payouts* every month on the merchants’ eStore, Scan to Order, and Scan to Pay transactions, as shown in the sample calculation below:
|
Gross eStore Merchant Sales |
PhP10,000.00 |
|
(Less): RUSH Transaction fees (5% of merchant sales) |
(PhP500.00) |
|
(Less): RUSH Delivery Fees |
(PhP50.00) |
|
Total Gross Payout (before taxes) |
PhP 9,450.00 |
|
Taxable gross payout (50% of total gross payout) |
(PhP 4,725.00) |
|
(Less): Withholding tax (1% of taxable gross payout) |
PhP 47.25 |
|
Net Payout to be received by the merchant |
PhP 9,402.75 |
This shall affect all RUSH eStore, Scan to Order, and Scan to Pay merchants who are expected to exceed gross payouts of PhP 500,000.00 for the current taxable year (2024). However, if your cumulative annual gross remittances do not exceed PhP 500,000.00 by the end of a taxable year, and the submitted Sworn Declaration furnishes this, RUSH will not withhold any taxes from your account.
RUSH shall provide all eStore merchants the relevant calculation of the amount to be withheld, and remit the same amount to the BIR. RUSH shall also provide the corresponding BIR Form 2307 for the tax withheld.
On the other hand, as mandated by the BIR, we kindly request that all eStore merchants provide their RUSH Account Managers or to the RUSH Support team (support@rush.ph) with the following information and documents by February 29, 2024:
- BIR Form 2303 or Certificate of Registration
- Business bank account separate from the owners’ bank account.
And by March 15, 2024, affected RUSH merchants must also provide:
1. Sworn Declaration (SD) of expected gross payout for 2024 acknowledged by BIR. This shall be the basis of the withholding of tax and the net payout computation, if applicable.