# What Shopee, Lazada and TikTok Shop withhold

> The deduction on your payout statement is a tax credit, not a fee. It is also half the rate almost everyone quotes.

Source: https://taxkaya.com/guides/marketplace-withholding-tax
Last checked: 2026-08-06

TAXKAYA is independent software, not affiliated with the Bureau of Internal Revenue. This document is general information, not tax advice.

## What most sources get wrong

- **Commonly said** That marketplaces withhold a flat 1% income tax on what they remit to sellers.
- **What is actually the case** The rule imposes 1% on one half of the gross remittance, which works out to 0.5% of the full amount. The difference is not academic: at ₱2,000,000 of remittances it is ₱10,000 of your money that either is or is not sitting with the BIR as a credit.
- **Basis** Revenue Regulations No. 16-2023

### What the rule is, and what it is not

Revenue Regulations No. 16-2023, issued 21 December 2023, added a withholding category covering remittances from electronic marketplace operators and digital financial services providers to their sellers and merchants. It amends the long-standing withholding regulations rather than creating a new tax.

It is commonly confused with the Internet Transactions Act, which was signed the same month. They are different instruments. The Internet Transactions Act is consumer-protection law and created the E-Commerce Bureau. The withholding obligation is an ordinary creditable-withholding exercise under the Tax Code. Conflating them leads people to look for the rate in the wrong document.

### The numbers

- The rate is 1% of one half of the gross remittance, so 0.5% of the whole. Read the regulation's own construction rather than the summaries. Almost every secondary source compresses it to a flat 1%, which overstates the deduction by double. *(Basis: RR 16-2023)*
- Gross remittance excludes several things people forget to subtract. Returns and discounts, separately-billed shipping, VAT passed through to you, and the platform's own commission all come out before the base is computed. *(Basis: RR 16-2023)*
- Below ₱500,000 of annual gross remittances, nothing should be withheld. The test looks at last year's remittances to you from that platform, or the cumulative figure this year. It is also waived if you are otherwise income-tax exempt or entitled to a lower rate and you file proof with the platform. *(Basis: RR 16-2023)*
- The exemption is not automatic. You have to file a sworn declaration. Sellers under the threshold submit a BIR-stamped sworn declaration to the platform, annually, by 20 January, using the template circulated with RMC 8-2024. Miss it and the platform withholds by default regardless of what you actually earned. *(Basis: RMC No. 8-2024 template)*
- It is creditable, not final. You get it back through your return. The platform issues a BIR Form 2307, which is what turns the deduction into a credit against your income tax. TikTok Shop is confirmed to issue these quarterly; the cadence for other platforms was not independently verified, so check your own seller centre. *(Basis: RR 16-2023; platform practice for the 2307 cadence)*

### Who it applies to

The definition of an electronic marketplace is broad: online shopping, food delivery, accommodation booking, and other similar online service or product marketplaces. It covers services as well as goods, which surprises sellers who assume it is a retail-goods rule.

Whether a pure freelance or service-matching platform counts is not settled. The catch-all in the definition is broad enough to plausibly reach one, and no source confirms it either way. If you freelance through a platform and see no withholding, that is not evidence the rule does not apply; if you see withholding, do not assume it was applied wrongly.

### Where things stand

The obligation was phased in through 2024 after two deferrals. Marketplace operators began withholding on 15 July 2024, and digital financial services providers followed by mid-October of that year.

It remains in force. RMC No. 55-2026, issued 26 May 2026, is a reminder to platforms about unmet alphalist-filing obligations rather than any change to the rate or the rule, and it notes that many platforms had still not fully complied by that date. The practical consequence for a seller: your 2307 may be late or missing even where the withholding itself happened, so reconcile your payout statements against the certificates you actually receive.

### What to do with it

Log the withheld amount against the income it came from, the same way you would a corporate client's 2307. It is money you have already paid toward this year's income tax, and it only reduces your bill if it reaches your return.

The most common way sellers lose it is by recording the payout net, as though the deduction were a platform fee. That understates your gross receipts and quietly forfeits the credit at the same time.

## Still unsettled

### Does this reach freelance and service-matching platforms?

- **What is known** The definition explicitly covers services, not only goods, and its catch-all clause is broad.

- **Where it stops** No source confirms or denies that a pure freelance-matching platform is an electronic marketplace operator under this rule. Do not assume it applies to your freelance platform, and do not assume it does not.

## Sources

- [Revenue Regulations No. 16-2023, full text (BIR, PDF)](https://bir-cdn.bir.gov.ph/BIR/pdf/RR%2016-2023.pdf)
- [RMC No. 55-2026 digest (BIR, PDF)](https://bir-cdn.bir.gov.ph/BIR/pdf/RMC%20No.%2055-2026%20Digest.pdf)
- [Cruz Marcelo & Angangco, summary of RR 16-2023](https://cruzmarcelo.com/quick-look-bir-revenue-regulations-no-16-2023-requires-e-marketplaces-and-digital-financial-services-providers-to-withhold-1-income-tax-on-remittances-to-merchants/)

## Read next

- [Selling through Paddle, Lemon Squeezy or Gumroad](https://taxkaya.com/d/guides/merchant-of-record-vat-philippines.md)

## The trips this involves

- [Survive a tax mapping visit](https://taxkaya.com/d/processes/tax-mapping.md)

## The forms this touches

- [BIR Form 2307: Certificate of creditable tax withheld](https://taxkaya.com/d/forms/2307.md)
- [BIR Form 1701Q: Quarterly income tax return](https://taxkaya.com/d/forms/1701q.md)