The information on this page is only applicable for businesses in the Philippines.
In compliance with Revenue Regulations (RR) No. 16-2023 and Revenue Memorandum Circular (RMC) No. 55-2024, the Bureau of Internal Revenue (BIR) is set to impose withholding tax on gross remittances made by e-marketplace operators and digital financial services providers to sellers and merchants. This regulation mandates that covered merchants will be subject to withholding tax on their qualified gross remittances starting October 13, 2024.
To ensure your documentation is up-to-date with us, please submit a copy of your most updated BIR 2303 and other relevant documents to tax@xendit.co. For the taxable year 2024, please submit these documents as soon as possible. For 2025 onwards, these documents should be submitted before January 20 of each year.
Who is affected by the Withholding Tax?
The withholding tax applies to gross remittances made to all local sellers and merchants who accept payments for their products through e-marketplace operators and digital financial services providers like Xendit.
However, certain entities and transactions are exempt from this withholding tax. These include, but are not limited to, and are subject to change:
Foreign Merchants
Lending Services
Traditional Remittance Providers
Aggregator Platforms
Pass-through Marketplaces
Government Accounts (with the exception of Government-Owned and Controlled Corporations or GOCCs)
Charities, Religious Organizations, and other Non-Taxable Entities
Additionally, there are further exemptions:
Sellers with annual gross remittances below PHP 500,000 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 are also exempt.
Any entity possessing a Certificate of Tax Exemption (CTE) from Income Tax is also exempt.
How the Withholding Tax works
The platform or provider that has 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.
Determining if Xendit is the Last Payment Facility: If you receive your remittances directly from Xendit without further disbursing them to your sub-merchants, then Xendit is likely the last facility controlling the payment. 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.
Calculation of Withholding Tax: 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.
Here's an illustrative example of how the withholding tax is calculated:
*Xendit fees and transaction counts are samples for calculating the withholding tax on gross remittances.
Your BIR Certificate of Withholding Tax (BIR 2307)
Xendit will issue your BIR Form 2307 (proof of tax withheld) on the 20th of the month following the deduction period. For example, February 2025's BIR 2307 will be issued on March 20, 2025.
To request your BIR Form 2307, email tax@xendit.co with the subject: [Request for BIR Form 2307 for Withholding Tax on Gross Remittance Deduction - Your Business Name]. We'll provide it by the 20th of the following month.