Tax policies of Shopee 2025

Regulations on Creditable Withholding Tax and BIR Registration of Shopee

In 2025, Shopee's tax policies align with the Bureau of Internal Revenue (BIR) Revenue Regulation No. 16-2023, which mandates that electronic marketplace operators, such as Shopee, withhold a 1% income tax on 50% of the gross remittances to sellers or merchants for goods and services sold through their platforms.

Starting January 7, 2025, shopee sellers are required to submit their BIR-stamped "received" Sworn Declaration of Gross Remittances by January 20 of each taxable year to ensure accurate taxation or exemption from the 1% Creditable Withholding Tax.

BIR Revenue Memorandum Circular 08-2024

Click here for more informations.

On April 15, 2024, the BIR published the Revenue Memorandum Circular (RMC) No. 55-2024 announcing the extension of the deadline for compliance to July 14, 2024.

(Please note that Shopee resumed charging withholding tax starting July 15, 2024.)

What is this regulation about?

This regulation, based on BIR Revenue Regulation No. 16-2023, requires local online sellers to be subject to a 1% Creditable Withholding Tax on 50% of their gross income, effectively amounting to 0.5% of their gross sales. 

To ensure compliance and determine the applicability of the withholding tax, sellers are required to submit the following documents to Shopee:

• 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

These measures are put in place to guarantee accurate taxation and adherence to Philippine tax regulations for online transactions carried out on platforms such as Shopee.

Furthermore, all local online sellers are required to register with the Bureau of Internal Revenue (BIR) to engage in online selling. 

Current sellers must provide their complete Business Information on the Seller Center by July 14 to prevent platform limitations.

What will happen by the deadline?

On July 15, 2024, at 12:00 AM, Shopee will automatically apply withholding tax in the following cases:

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

If your business information is incomplete, all your orders under escrow starting July 15 will be taxed as Non-VAT. Without a provided TIN, these orders cannot be claimed as a tax credit.

Restrictions: Sellers who fail to complete their business information page may have their product listings hidden from public view or face limited access to their Shopee account.

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 (e.g., 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 Centre 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. 1. 
      

3. 
   

4. What Do Sellers Need to Do Now?

Sellers must take the necessary steps to ensure proper taxation and compliance with the new regulation. If they fail to do so, their listings will no longer be visible to the public starting April 15, 2024.

1) Update their Business Information on Seller Centre. 

1. Input their Registered Name (Taxpayer name on BIR Certificate of Registration [CoR]), Registered Address, TIN, Certificate of Registration, and Business Name/Style. 
2. 
   

Step 1: Go to Shop > Shop Information > Business Information tab and click on“Edit”

Step 2: Input the information as written in your BIR Certificate of Registration (CoR). Note that the information you place here will also be reflected in your tax invoices (i.e. Official Receipt, Billing Statement)

1. -Seller Type
2. -Registered Name
3. -Registered Address
4. -Taxpayer identification number (TIN): Make sure to enter the following correct format:
5. -9-digit TIN plus 3-5 digit branch code
6. -Must be entered with dashes ( - )
7. -If no branch code is provided, enter "000" as branch code
8. -Sample correct TIN format: 123-456-789-00000
9. -VAT registration status (VAT or non-VAT)
10. -BIR Certificate of Registration 
11. -Business name/trade name 
12. -Most recent Sworn Declaration
13. 
    

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

Then click "save."

In 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.