What is this regulation about?

• BIR Certificate of Registration (BIR Form No. 2303)
• Certificate of Tax Exemption or proof of entitlement to a lower income tax rate, if applicable
• Sworn Declaration of Gross Remittances, stamped "received" by the BIR, if claiming exemption based on the PHP 500,000 threshold

• For orders created on or after July 15
• For all orders escrow verified on or after July 15

Does the Withholding Tax Apply to All Sellers?

Under this regulation, the withholding tax applies to sellers or tax entities in the following cases:

1. The seller submits a Sworn Declaration (SD) confirming that their total income exceeds ₱500,000.
2. The seller's total annual gross remittances from Shopee, either from the previous year or the current year, exceed ₱500,000.
3. The seller fails to submit a Sworn Declaration (SD) of gross remittances.

Sellers or tax entities with income at or below this threshold are exempt from the withholding tax, provided they submit a Sworn Declaration stamped and verified by their BIR Revenue District Office (RDO) to Shopee.
 

Additionally, the ₱500,000 minimum value threshold is shared across all shops linked to the same tax entity. Once the combined income of these shops surpasses the threshold, withholding tax will be applied to all associated shops.
 

Sellers may also qualify for exemption as outlined by applicable laws or agreements (eg, tax exemption certificates or documents such as BMBE/Barangay Micro Business Enterprise). To verify tax exemption status, sellers can submit the necessary documents by reaching out to Shopee Customer Service through Shopee Chat.
 

Note: Withholding tax is not a new tax. The government introduced the collection of withholding tax from online sellers to ensure fairness in tax obligations between businesses with physical stores and those selling through online platforms.
 

Tax exemption documents will still be reviewed and approved by a Shopee representative before a seller is considered exempt on the platform. The review process typically takes 2-3 days, and the results will be sent via email.
 

How do I submit Proof of Exemption?

Sellers can submit their Tax exemption documents for Shopee verification by contacting Customer Service via Shopee Chat.
 

Telephone No. (02) 8880 5200

On Seller Center , click on the Contact Shopee icon on the lower right corner of the page:

source: https://seller.shopee.ph/edu/article/19930
 

On mobile phone tap Chat with Shopee or tap Help Center under the Me tab:

source: https://www.facebook.com/share/p/19iySnc5hj/

How Will the 1% Withholding Tax Be Calculated and Deducted?

The calculation of withholding tax is based on the seller's / tax entity's VAT Registration Type (VAT Registered or Non-VAT Registered), which is indicated in the BIR Certificate of Registration.

Withholding tax is calculated as follows:

* The tax base is rounded off to 2 decimal places.

** Withholding Tax is rounded off to 2 decimal places. In this sample computation, ₱477.00 x .005 = ₱2.385 rounded off to ₱2.39

For orders completed before Oct 1, 2024, Withholding Tax was rounded up to the nearest whole number.
 

* Calculation Net of 12% VAT: ₱492.00 / 1.12 = ₱439.29

** The tax base is rounded off to 2 decimal places.

*** Withholding Tax is rounded off to 2 decimal places. In this sample computation, ₱424.29 x .005 = ₱2.12145 rounded off to ₱2.12

For orders completed before Oct 1, 2024, Withholding Tax was rounded up to the nearest whole number.

The calculation of withholding tax is based on the shop / tax entity's VAT Registration Type (VAT Registered or Non-VAT Registered), which is indicated in the BIR Certificate of Registration.
source: https://seller.shopee.ph/edu/article/19930

Here's how you can check:

1. On Seller Centre:

1. - Go to My Order > Select an order and click on Check Details
2. 

 

CONCLUSION:

Tax declaration is a crucial process for ensuring compliance with tax laws and regulations. For online sellers, it is essential to accurately report earnings, meet registration requirements, and submit necessary documents to avoid penalties and restrictions. By properly declaring taxes, sellers can maintain a transparent and lawful business operation, contributing to a more organized and efficient tax system. Staying informed about deadlines and updates, such as those related to withholding tax and exemptions is vital for long-term business success.