Bureau of Internal Revenue (BIR) has entered a new phase of enforcement; one that directly affects millions of Filipino online sellers, freelancers, and digital merchants.
BIR is Strengthening Tax Administration
The BIR has reiterated that all online sellers must register, regardless of size or income level. The agency emphasized that even small sellers, those earning modest amounts or selling part‑time, are required to secure a Taxpayer Identification Number (TIN), register their business, and issue BIR‑compliant invoices.
This requirement aligns with Revenue Memorandum Circular (RMC) No. 60‑2020, which clarified that anyone conducting business through electronic media must register and pay taxes.
A second major development has also been implemented recently: businesses must now separately show withholding tax on invoices, rather than embedding it within the total amount.
This change is part of the BIR’s push for clearer tax reporting and aligns with the structured electronic invoicing under Revenue Regulations No. 11‑2025.
Combined, these developments depict a tightening of compliance expectations for digital merchants and a move toward more transparent tax documentation and tax administration.
As digital commerce expands and platforms increasingly report seller income, the BIR is closing long‑standing compliance gaps and modernizing its oversight mechanisms. Online selling is no longer an informal side hustle—it is a taxable business activity subject to the same rules as traditional enterprises.
To online sellers, this change would require a deeper understanding of tax obligations, invoicing rules, and the implications of withholding tax. For the country’s digital economy, it pins the spotlight on greater transparency, standardized reporting, and stronger consumer protection.
Why No Online Seller is “Too Small” for BIR Registration
BIR’s position is grounded in the National Internal Revenue Code (NIRC), which requires every person engaged in trade or business to register.
Online selling counts as business activity regardless of scale. Whether a seller earns ₱500 a week or ₱500,000 a year, the obligation to register remains.
This requirement is not new, but enforcement has intensified.
Platforms such as Shopee, Lazada, and TikTok Shop now report seller income to the BIR and withhold tax on payouts under Revenue Regulations No. 16‑2023. This means the BIR already sees gross remittances before sellers file anything.
Sellers mistakenly believe they are exempt because they are “small.” However, the BIR clarified that size does not determine registration, regularity of selling does.
If a seller posts multiple items, restocks inventory, or treats selling as a source of income, they are considered engaged in business.
New Requirement: Separately Showing Withholding Tax on Invoices
The Commissioner’s directive requiring businesses to separately show withholding tax on invoices is a major regulation change.
Previously, many sellers embedded withholding tax within the total amount or omitted it entirely. The new rule requires explicit disclosure, improving transparency for both buyers and sellers.
The BIR is pushing for structured electronic invoicing and clearer tax reporting through mandating of the separate disclosure, helping ensure that buyers understand how much tax is withheld and sellers can accurately claim credits using BIR Form 2307.
This requirement also supports audit readiness. Clear disclosure of withholding tax reduces disputes, improves documentation, and aligns with international best practices in digital commerce.
How Withholding Tax Works for Online Sellers
Under Revenue Regulations No. 16‑2023, e‑marketplaces and digital financial service providers must withhold 1 percent on one‑half of gross remittances, effectively 0.5 percent of sales.
Sellers earning ₱500,000 or less per platform per year may claim exemption by submitting a sworn declaration.
Withheld amounts are not additional tax; they are credits against income tax. Sellers can claim these credits using BIR Form 2307 issued by the platform.
The requirement to separately show withholding tax on invoices ensures that sellers can reconcile withheld amounts with their income tax returns and avoid overpayment.
BIR is Imposing Stricter Digital Commerce Enforcement
The BIR has intensified enforcement as digital commerce has grown rapidly, with millions of Filipinos selling online. The expansion has created compliance gaps, with many sellers operating informally.
Platforms now also report seller income, making enforcement easier. The BIR can cross‑check platform data with tax returns, identify discrepancies, and target audits more effectively.
Moreover, electronic invoicing requires standardized documentation. Separate disclosure of withholding tax supports this transition and improves data quality.
Ultimately, BIR aims to protect consumers by ensuring that sellers are legitimate, registered, and accountable. The requirement to display a BIR Registration Seal Badge under RMC No. 38‑2026 reinforces this goal.
Compliance Burden for Small Sellers
To small Filipino sellers, compliance can feel overwhelming.
Registration requires securing a TIN, registering with the BIR, obtaining a Certificate of Registration (COR), and issuing BIR‑compliant invoices. Sellers must also file quarterly and annual returns, maintain books of accounts, and comply with withholding tax rules.
However, compliance is often simpler and cheaper than sellers fear. Many small sellers owe little or no income tax, especially those earning below ₱250,000 annually. The burden lies in documentation, not tax payment.
The BIR’s push for digital registration through ORUS (Online Registration and Update System) aims to reduce friction and make compliance more accessible.
What is ORUS?
The Online Registration and Update System (ORUS) is the BIR’s centralized digital platform for taxpayer registration, designed to replace the long‑standing manual and paper‑based processes that historically made compliance slow, fragmented, and prone to errors.
ORUS allows individuals and businesses, including online sellers, freelancers, and digital merchants, to register with the BIR, update taxpayer information, and manage core registration requirements entirely online.
It is part of the BIR’s digital transformation agenda under the Digital Transformation Roadmap 2020–2030, which aims to modernize tax administration and reduce friction for taxpayers.
ORUS streamlines processes for taxpayers with its digital platform.
New taxpayers can apply for a Taxpayer Identification Number (TIN), secure their Certificate of Registration (COR), and pay the Annual Registration Fee through the platform. Existing taxpayers can update business information, transfer registration to a different Revenue District Office (RDO), or add business lines without visiting a BIR office.
The system also integrates with electronic payment channels, enabling real‑time settlement of registration fees and reducing the need for in‑person transactions.
As digital commerce becomes more regulated, platforms like DOPAY, a BSP‑licensed e‑wallet and crypto wallet, help ensure that financial transactions remain secure, transparent, and aligned with regulatory standards.
For our beloved OFWs, with DOPAY, you can be assured that you can send money to the Philippines safely and at low cost.
Simply top-up your DOPAY wallet from anywhere in the world and send that to someone in the Philippines through DOPAY, and they will receive pesos in their DOPAY wallet; all within the app!
With DOPAY’s crypto wallet, you can gain crypto rewards for every trade under our Trade & Earn program. Not just that, with DOPAY’s Refer & Earn program, Filipinos can unlock new doors for earning possibilities with every successful referral.
Download the DOPAY app today!
