Withholding Tax on Gross Remittances (PH)
This documentation is applicable for Philippines 🇵🇠businesses only.
What is Withholding Tax Slip on Gross Remittances?
In compliance with Revenue Regulations (RR) No. 16- 2023 and Revenue Memorandum Circular (RMC) No.55-2024, the BIR will impose withholding tax on gross remittances made by e-marketplace operators and digital financial services providers to seller/merchants.
Under this regulations, covered merchants will be subjected to withholding tax on their gross remittances on qualified transactions starting October 13, 2024.
To make sure that your documents are updated with us, please submit a copy of your most updated BIR 2303 and other relevant documents to tax@xendit.co.
Frequently Asked Questions (FAQ)
Q1: Who is Affected?
A1: This applies to gross remittances to all local sellers and merchants who accept payments for their products through e-marketplace operators and digital financial services providers like Xendit except gross remittances to the following but not limited to and subject to change:
- Foreign Merchants
- Lending Services
- Traditional Remittance Providers
- Aggregator Platforms
- Pass-through Marketplaces
- Government Accounts (except Government-Owned and Controlled Corporations or GOCCs)
- Charities, Religious Organizations, and other Non-Taxable Entities
Additional Exemptions:
- Sellers with annual gross remittances below P500,000 per year may be exempt if they submit a Sworn Declaration of Gross Remittances.
- Payout transactions (e.g., refunds and disbursements) are not subject to this tax.
- Credit card transactions
- Any entity with a Certificate of Tax Exemption from Income Tax (CTE)
Q2: How does it work?
A2: The platform or provider with final control of your remittance before it reaches you will be responsible for withholding the tax. Depending on your settlement arrangement, Xendit Philippines may be this entity. In such cases, Xendit Philippines will withhold 1% of 50% of your gross remittance on collections.
Q3: What you need to do?
A3: Merchants with annual gross remittances below P500,000 may be exempt from the withholding tax by submitting a Sworn Declaration of Gross Remittance.
- Take action: Submit your sworn declaration to Xendit at tax@xendit.co as soon as possible to avoid unnecessary withholding tax deductions.
- Here's what happens: Xendit will continue withholding tax until we receive your declaration. Once submitted, any withheld tax will be remitted back to you.
- Exemption: Not affected industries mentioned above are not required to submit the sworn declaration to us. However, if you have a Certificate of Tax Exemption, please submit a copy to tax@xendit.co.
Q4: How do I know if Xendit is the last payment facility?
A4: If you receive your remittances directly from Xendit without further disbursing the remittances to your sub-merchants, then Xendit is likely the last facility controlling the payment. However, to confirm if you are subject to withholding tax on gross remittance, you may reach out to your Account Manager (AM) or contact Customer Support (CS) via help@xendit.ph
Q5: How will Xendit PH calculate the withholding tax?
A5: The withholding tax applies to the gross remittance received by local sellers/merchants. "Gross remittance" refers to the total amount collected from buyers/consumers for goods or services sold, excluding platform fees.
Xendit will compute the withholding tax based on the total collections after deducting Xendit transaction fees. Please note that the following is a sample for illustrative purposes only.
| Attributes | Prior to RR 16-2023 | After RR 16-2023 |
|---|---|---|
| Total collections/transactions volume made 10 transactions* | 1,000.00 PHP | 1,000.00 PHP |
| Less: Fees payable to Xendit (PP5,60/txn x 10)* | (56.00 PHP) | (56.00 PHP) |
| Gross collections to be remitted | 944.00 PHP | 944.00 PHP |
| Less: WHT on gross remittance (1% of 50% of gross remittance, eg P944 x 0.5%) | 0.00 PHP | (4.72 PHP) |
| Total remittance to merchant, net of WHT | 944.00 PHP | 939.28 PHP |
*Xendit fees and transaction counts are samples for calculating the withholding tax on gross remittances.
Q6: Can I be exempt from the withholding tax?
A6: If you are not including among the list of excluded activities above, you may still be exempt if you meet the following criteria and provide the necessary documents:
- Total Annual Gross Remittance is Less Than P500,000:
- Submit a Sworn Declaration duly received by the BIR to Xendit PH. OR
- Exempt from Income Tax or Subject to Lower Rate:
- Submit a duly issued Certificate of Tax Exemption or Entitlement to Xendit.
Deadline: For the taxable year 2024, please submit as soon as possible. For 2025 onwards, please submit these documents before January 20 of each year.
Q7: What if my annual gross remittance is below P500,000 but I haven't submitted the required documents?
A7: According to the new regulations, merchants who fail to provide the necessary documents will be subject to withholding tax regardless of the amount.
Q8: I am a foreign merchant. Am I affected?
A8: No, these new regulations only apply to gross remittances received by local sellers/merchants.
Q9: Will I get BIR Certificate of Withholding Tax (BIR 2307) for the withholding tax for gross remittance deduction?
A9: Yes, Xendit will issue the BIR 2307 on the 20th of the following month.
For example, Gross Remittance BIR 2307 of February 2025 will be issued in March 20, 2025
Q10: How Can I Request BIR Form 2307 as Proof of Gross Remittances?
A10: Please kindly reach out to our Customer Services by email help@xendit.ph or tax@xendit.co to request for BIR Form 2307 as Proof of Gross Remittances deduction.
Then we will provide the BIR 2307 by the 20th of the following month
Last Updated on 2025-01-30