Finance Secretary Benjamin Diokno has defended the Bureau of Internal Revenue’s plan to impose withholding tax on online sellers, suggesting that it will promote “fairness” among all sellers.
Early this year, the BIR proposed to impose a creditable withholding tax of 1% on one-half of the gross remittances of online platform providers to their partner sellers or merchants.
In a report from ABS-CBN News, Diokno emphasized in a briefing that just like taxes imposed on regular stores, online sellers should also be subject to taxation. He said: “It’s not only increasing tax revenue. It’s a matter of fairness. Kasi kung bibili ka sa regular store, magbabayad ka ng tax. Dito hindi ka magbabayad, unfair ‘yon.”
He further explained that people have to perceive that the tax system is fair so they will be willing to pay.
To achieve this, the BIR intends to amend existing revenue regulations to include income payments made to online platform providers. However, Diokno highlighted that beyond the potential increase in tax revenue, it is crucial to assess the feasibility of collecting taxes on these transactions.
“Another factor when you consider tax system is how much money can you really collect? May mga tax na maganda lang pakinggan, but is it administratively easy to collect? Yung cost per $100, how much will it cost you to collect $100 dollars?” Diokno said.
“I think you have to look also at the impact of tax on the economy. Hindi lang yung single-minded na raise revenue. That’s not your only objective eh kasi fairness is also an objective. Simplicity is an objective. Kasi pwede ka makapag-impose ng tax pero napaka-complicated so di ka rin makakakolekta di ba?” Diokno said.
