[World Tax News] Phillippines Imposes 1% Withholding Tax on Online Merchants and More

Editorial Team – [2024] 158 taxmann.com 619 (Article)

World Tax News provides a weekly snippet of tax news from around the globe. Here is a glimpse of the tax happening in the world this week.

1. Phillippines imposes 1% withholding tax on online merchants

The Bureau of Internal Revenue (BIR) of the Philippines has announced that online merchants with earnings of more than PHP500,000 annually are now subject to a 1 per cent withholding tax.

BIR Revenue Regulation, issued last December, said the withholding tax would apply to one-half of the gross remittances by electronic marketplace operators and digital financial services providers to the sellers or merchants for the goods or services sold through their platform.

An electronic marketplace is defined as a digital service platform whose business is to connect online buyers/consumers with online sellers/merchants, facilitate and conclude the sales, process the payment of the products, goods or services through such digital platform, or facilitate the shipment of goods or provide logistic services and post-purchase support within such platforms. These include marketplaces for online shopping, food delivery platforms, and platforms for accommodation booking.

However, it has been clarified that the withholding tax will not be applicable if the cumulative gross remittances to an online seller/merchant in a taxable year have not yet exceeded PHP500,000. Also, the requirement does not apply to the sellers subject to a lower income tax rate under any existing law.

Source: Release by the Bureau of Internal Revenue (BIR)

2. Russia releases list of jurisdictions that do not engage in exchange of Country-by-Country reports

Order No. ED-7-17/915@, issued by the Russian Federal Tax Service (FTS) and published in the Official Gazette, outlines a compilation of jurisdictions experiencing systemic failures in the automatic exchange of Country-by-Country (CbC) reports. In such failures, a constituent entity within Russia belonging to a foreign-parented group might be obligated to file a CbC report locally (secondary local filing). Notifications will be sent to the constituent entity, informing them of the requirement to submit a CbC report.

Among the jurisdictions specified are Australia, Austria, Belgium, Bermuda, Cyprus, Denmark, Finland, France, Germany, Greece, Ireland, Italy, Japan, Luxembourg, the Netherlands, Norway, Poland, Portugal, Romania, Slovenia, Spain, and Sweden.

Source: Order No. ED-7-17/915@ by the Russian Federal Tax Service (FTS)

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