The Bureau of Internal Revenue (BIR) has imposed a one percent withholding tax on gross remittances by e-marketplace operators and digital financial services providers to merchants for goods and services sold paid through the former's platform.

Revenue Regulation No.2-98, as amended by RR No.11-2018 was issued on December 21 but took effect on Wednesday when it was published in a newspaper.

The BIR says e-marketplace operators is a digital platform which business is to link online consumers with online merchants, facilitate and conclude sales, process payment of products, and goods and services.

The withholding tax will not be imposed if the annual total gross remittances to an online merchant for past year will not surpass P500,000.

It will not cover online sellers with cumulative gross remittances to online merchant in a taxable year not exceeding P500,000. Cooperatives registered with the BIR with a valid certificate of tax exemption are not covered.

The withholding tax is in addition to existing withholding tax obligations imposed on e-marketplace operators. DMS