Feb82024

🎉 Attention all online sellers and merchants! 🎉

Effective from January 1, 2024, Revenue Memorandum Circular No. 8-2024 aims to clarify the provisions of Revenue Regulations No. 16-2023, specifically focusing on putting withholding tax on gross remittances made by online sellers and merchants.

Here are the key points you need to know:

  1. Effective Date: The circular came into effect on January 1, 2024, giving a 15-day transition period after its publication in the Manila Bulletin on December 27, 2023.
  2. Transition Period: A 90-day grace period was provided to comply with the Bureau of Internal Revenue (BIR) requirements and adjust to these tax changes.
  3. Withholding Tax: The withholding tax applies to gross remittances exceeding P500,000 per year from e-marketplace platforms and digital financial services providers.
  4. Tax Rate: Online Sellers and digital financial services providers will be subject to a 1% withholding tax on 50% of their gross remittances, effectively amounting to 0.5%.

Here’s rundown of questions and answers you might have regarding:

  • RMC No. 8-2024
  • BIR Business Registration
  • Accounting and Bookkeeping
  • Tax Compliance

 

 

BIR Business Registration

Q: If I already have a TIN, does it mean I am already registered?

  • A: Your TIN is registered, but you are NOT registered as a business yet. It is a separate process.   

Q: What exactly do I need to be able to sell online?

  • A: Your business must be BIR registered. You will need the following:
  1. DTI Certificate (if individual) or SEC Certificate (if Corporation)
  2. Valid IDs
  3. If renting – Contract of Lease

Q: What if I only earn a small amount, do I still need to register?

  • A: Yes. You still need to register your business. Ideally, you need to be BIR-registered before you transact or sell.

Q: What if I only sell on Facebook? Do I need to register?

  • A: Yes, regardless of platform, you need to register your business regardless of the size of your income.

Q: What if I have many accounts in Shopee and they have different names?

  • A: You may opt to use one document / COR for these different accounts but you have to consolidate the sales from all. You may also register these accounts as different entities.

Q: Do I need a Mayor’s permit if I’m selling online from my house? 

  • A: There is a provision for home-based sellers that you do not need a Mayor’s Permit, but eventually you will still need to acquire one.

Q: How to register my business if I am based abroad / I’m an OFW?

  • A: Please schedule a call with us so we may discuss the whole process + costs with you. You need a notarized Special Power of attorney. Ship it to us and we can do the registration for you.

Q: Are my sales from 2023 tagged as default?

  • A: Yes, if you haven’t registered your business at that time.

Q: Do I need a new TIN for the business or trade name? I currently use my personal TIN for the sole proprietorship.

  • A: You don’t need a new TIN if your new business is a sole proprietorship. However, if your new business is a corporation, you need a new TIN.

Q: Kindly elaborate on falling under the CO-OP as an online seller

  • A: It is a group of sellers that are just starting and they have little sales to begin with. These sellers are not yet registered. You need to coordinate with your Co-Op on what you need to do to be compliant as they update their requirements from time to time.

Q: If I’m selling online from my home/residence can I apply for a Mayor’s Permit?

  • A: Yes. This is required.

Q: If we have individual businesses, can our separate Certificate of Registration reflect the same address?

  • A: Yes this is allowed.

Q: If I’m selling online, which is better for DTI registration, municipal or national?

  • A: Both are okay. You can sell nationally but your business name can be used only in the area covered.

Q: What If I’m already selling online and I still don’t have a Mayor’s permit?

  • A: You should register at your respective LGU. All you need is your DTI certificate and your BIR registration.

Q: What requirements do I need to register as BMBE?

  • A: You need your DTI certificate and comply with a list of requirements.

Q: If professional practice, do I still need to register with DTI and LGU?

  • A: Yes. You need to register.

 

 

Accounting and Bookkeeping

Q: In the case of BMBE (Barangay Micro Business Enterprise), even if there is no deduction for income tax for the seller, is it still necessary to have an official receipt (OR) due to itemized deduction?

  • A: If the sellers are non-VAT engaged in trading and are also registered as BMBE, it is automatically considered itemized.

Q: I’m already registered but I don’t know how to bookkeep / file taxes.

Q: What if my supplier does not issue an official receipt?

  • A: You must request one from your supplier. Otherwise, you won’t be able to claim expenses.

Q: Can I deduct labor expenses and can I use an acknowledgment receipt?

  • A: Yes you can use acknowledgement receipt. You need to include the labor expense in your labor list also.

Q: Normally, what is the maximum accumulated threshold allowed for petty cash?

  • A: Petty cash is only for small expenses. Purchases to your suppliers are not allowed in petty cash.

Q: If I’m an importer and my supplier doesn’t have a receipt what can I use?

  • A: You may use proof of transactions.

Q: I’ve been a registered taxpayer since January 2024 and I’ve sent my requirements to the platform, but my booklet hasn’t arrived yet. When does my recording of my Books of Account start?

  • A: When you started. While waiting for your booklet, there is a generic sales invoice you can buy from the BIR so you can start.

Q: What is an accepted proof of transaction?

  • A: Purchase order and delivery receipts if no sales invoice is available.

Q: What types of receipts can I use to deduct from my Tax?

  • A:You may use receipts related to Direct costs or Opex (overhead expenses);
  1. Suppliers Invoices
  2. Utilities
  3. Communication
  4. Rental
  5. Payroll

To know more about receipts, you may click on this link: A Guide to Tax Deductions and Handling Official Receipts 
Q: Can I just use 1 sales invoice per day?

  • A: We have an ease of paying taxes that will be implemented soon. From 100 pesos, it will now be 500 pesos for each Sales Invoice issued. So what you need to do is just accumulate that amount, and once it reaches the threshold, you can issue a single invoice. However, if your buyer requests a sales invoice, regardless of the amount, you need to issue one.

Q: Where can I request a copy of my previous books of accounts?

  • A: You may request one with the BIR

Q: If I am registered as a professional, can I also sell products?

  • A: You need to register separately to avoid penalties.

 

 

Tax Compliance

Q: If TikTok remits Withholding Tax, do I need to declare all my transactions?

  • A: All transactions are mapped out and visible to the BIR. Your records should match the remittances from TikTok, Shopee, and Lazada. Also, you should receive a 2307 Form from the platform you are selling on.

Q: If I register my business with the BIR now, do I still have to declare my 2023 sales?

  • A: Yes you may. You can declare as far back as to when you started selling.

Q: When is the 1% Withholding Tax effectivity date?

  • A: January 1, 2024, is the Effectivity date. This is effective for the whole year of 2024.

Q: Every transaction? What if my gross sales are less than 500k annually? Do I receive a refund?

  • A: No, you will not receive a refund. If you are expecting that your gross sales will be below 500,000, you need to send a sworn declaration to your respective e-commerce platform stating that your expected income is less than 500,000 for the year.

Q: If I have a BMBE certificate, am I exempted from Income Tax?

  • A: Yes, but you need to follow the proper compliance for this and submit it to your respective platform.

Q: Do I need to remit the 1% Withholding Tax?

  • A: Your respective e-commerce platform is liable to process that.

Q: Where do I get my 2307?

  • A: Shopee, Lazada at TikTok will be the one to provide you with your 2307.

Q: If I’m just a distributor of a specific product but my gross sales are more than 3 million pesos (Php3,000,000), is it considered taxable?

  • A: Yes, once you reach 3 million in sales you will be switched from non-vat to VAT

Q: 500k a year, will it start this year or is it retroactive? 

  • A: This is not retroactive. 500k is per year and zeroes out every year.

Q: Will TikTok, Shopee, and Lazada deduct withholding taxes? Do I need to do anything else?

  • A:Yes they are in charge of the documentation with regards to withholding taxes. But they need to provide you with a 2307. You will need this to file your income tax return.

Q: Regarding the law on ease of paying Tax, do I still need an Official Receipt (OR) or just a Sales Invoice? (SI)

  • A: As of now OR is still acceptable, eventually BIR will shift to sales invoice.

Q: Can Micro Small and Medium Enterprises / Small businesses be audited? Or is it just the big companies?

  • A: Businesses of any size can be audited.

Q: With regards to failure to renew, do I still need to file my 0605 without the payment?

  • A: For now it is waived, and we are not required to pay for annual registration. But best to check with the BIR for updates.

Q: If e-commerce platforms will deduct withholding tax, what do we expect to receive from the platform in terms of forms? Monthly? Quarterly? Annually?

  • A: It depends on the platform, if they withhold from you for the month, you may request a 2307 for that month. But it is best to coordinate or check with your platform. Reminder, with every payout they must provide you with a 2307.

Q: When do we receive our 2307 for January 2024?

  • A: Filing is on the 10th of the month, so you may receive your 2307 after that.

Q: If I register my business now with the BIR will they penalize me for sales made before registration? 

  • A: There is no penalty for previous sales.

Q: What if my 2307 is not signed, is it okay?

  • A: No. You are to request a filled-up and signed 2307.

Q: What happens if my 2307 does not match the total amount of issued receipts?

  • A: The discrepancies may lead to an audit.

Q: As a Professional practitioner under the 8% tax rate, do I need to file quarterly ITR? 

  • A: Yes, you still need to file quarterly.

Understanding these changes is crucial for ensuring compliance and managing your finances effectively. So, mark your calendars and make the necessary adjustments to stay on top of your tax obligations.

End your bookkeeping and tax compliance worries today! Reach out to us to discover how we can boost your business to new heights. 🚀

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