BIR Form 2307 for Online Sellers: The 0.5% E-Marketplace and DFSP Withholding Tax Under RR No. 16-2023
Under Revenue Regulations (RR) No. 16-2023, electronic marketplace (e-marketplace) operators and digital financial services providers (DFSPs) are withholding agents that must withhold creditable withholding tax on gross remittances they pay to online sellers and merchants — an effective rate of 0.5%, since simplified to a flat 0.5% of gross remittances under RR No. 5-2025 — unless the seller’s cumulative gross remittances for the taxable year have not exceeded ₱500,000. The marketplace or DFSP issues BIR Form 2307 to the seller for the tax withheld.
This guide is part of the BIR Form 2307 series and focuses on the withholding-certificate mechanics for online sellers: who withholds, the ₱500,000 threshold, how the math works, and how a seller credits the certificate. For the separate alphalist-reporting duty that rides along with this same withholding, see RMC No. 55-2026: Alphalist Rules for E-Marketplace Operators and DFSPs — that post covers the QAP/DAT filing side, not the certificate itself.
Generate a Seller's BIR Form 2307 FREE →Who must withhold — the marketplace or DFSP, not the seller #
The e-marketplace operator or DFSP is the withholding agent under RR No. 16-2023, not the online seller receiving the payout. A platform that settles seller proceeds — Shopee, Lazada, and similar marketplaces, or a payment channel like a DFSP that remittance-settles merchant funds — must deduct the tax before the seller ever receives the net amount, remit it to the BIR, and issue the seller a certificate.
This mirrors how RMC No. 55-2026 frames the same platforms as withholding agents for alphalist purposes: any entity that “controls remittances to sellers or merchants for goods or services sold through that channel” sits on the withholding-agent side of the transaction, even though the seller is the one earning the income. A seller cannot self-withhold or opt out by agreement with the platform — the obligation belongs to whoever controls the payout.
The ₱500,000 threshold and how it’s tracked #
RR No. 16-2023 exempts an online seller from this withholding if their gross remittances for the taxable year have not exceeded ₱500,000 — and that ceiling is cumulative across every e-marketplace operator and DFSP the seller transacts through, not a separate ₱500,000 allowance per platform. A seller who nets ₱300,000 on one marketplace and ₱250,000 on another has already crossed ₱500,000 in combined remittances, even though neither platform alone reached the threshold.
The regulation’s operative text on this exemption reads:
“the annual total gross remittances to an online seller/merchant for the past taxable year has not exceeded Five Hundred Thousand Pesos (₱500,000.00)… [or] the cumulative gross remittances to an online seller/merchant in a taxable year has not yet exceeded Five Hundred Thousand Pesos (₱500,000.00)” — RR No. 16-2023, Section 3, as reproduced in tax-advisory coverage of the regulation
In practice, a seller who expects to stay under the ceiling files a BIR-received Sworn Declaration of Gross Remittances with each platform. Withholding kicks in — automatically, on the amount exceeding the threshold — the moment a platform’s own remittance records show the seller has crossed ₱500,000 during the year, upon receipt of a sworn declaration disclosing the seller has already exceeded it elsewhere, or if the seller simply fails to submit the required declaration on time. Crossing the line does not trigger tax on the already-exempt first ₱500,000; only remittances above it are withheld.
How the 0.5% math works #
RR No. 16-2023 originally computed the tax as 1% applied to one-half (50%) of the gross remittance — a two-step calculation that nets out to an effective 0.5%. RR No. 5-2025 (issued February 27, 2025, effective March 14, 2025) restated the same 0.5% outcome as a single flat rate applied directly to the full gross remittance, the same simplification it made for credit card company withholding under Section 2.57.2(H). The seller’s actual tax burden is unchanged either way — only the computation step was streamlined.
| Pre-RR No. 5-2025 formula | RR No. 5-2025 flat formula | |
|---|---|---|
| Base | 50% of gross remittance | 100% of gross remittance |
| Rate applied to that base | 1% | 0.5% |
| Effective withholding on full remittance | 0.5% | 0.5% |
The applicable ATC codes on BIR Form 2307 are WI820 (e-marketplace, individual seller) / WC820 (e-marketplace, corporate seller) for platform remittances, and WI830 / WC830 for DFSP remittances — see the ATC reference table in the EOPT Act / CREATE MORE 2026 guide for how these sit alongside other 2307 categories.
Actual withholding did not begin the day RR No. 16-2023 took effect. The regulation itself became effective January 11, 2024, but the BIR granted e-marketplace operators and DFSPs a 90-day transitory period (January 15–April 14, 2024) to update their systems, then extended it another 90 days under RMC No. 8-2024 through July 14, 2024. Platforms began actually deducting the tax from seller payouts on July 15, 2024.
Worked example: a seller crosses ₱500,000 mid-year #
A seller whose cumulative gross remittances from one marketplace reach ₱650,000 in the year owes withholding only on the ₱150,000 above the ₱500,000 exemption — ₱750 at the 0.5% effective rate.
A fictional seller, Marisol’s Home Finds, sells exclusively through one marketplace and has not filed a Sworn Declaration. Her cumulative gross remittances for the year total ₱650,000 by the time she crosses the threshold:
| Item | Amount |
|---|---|
| Cumulative gross remittances for the year | ₱650,000.00 |
| Exempt portion (first ₱500,000) | ₱500,000.00 |
| Amount subject to withholding (excess) | ₱150,000.00 |
| Creditable withholding tax (0.5% of excess) | ₱750.00 |
| Net amount remitted to Marisol on the taxed portion | ₱149,250.00 |
The marketplace withholds nothing on the first ₱500,000 already remitted — withholding applies prospectively once the platform’s records show the threshold has been crossed, and only to the ₱150,000 that pushed her over it. The marketplace remits the ₱750 with its monthly and quarterly EWT returns, reports Marisol on its quarterly alphalist of payees (the RMC No. 55-2026 obligation), and issues her a BIR Form 2307 showing ₱150,000 income payment, ATC WI820, and ₱750 tax withheld.
What the seller does with the certificate #
A seller who receives BIR Form 2307 from a marketplace or DFSP credits the withheld amount against their own income tax due — the certificate does not change how the seller reports their gross income. Marisol still declares her full ₱650,000 in gross remittances (plus any other income) when filing BIR Form 1701Q or 1701A, then subtracts the ₱750 shown on the certificate as creditable withholding tax already paid on her behalf.
This is the same crediting mechanism covered in the site’s broader guide on online sellers’ and content creators’ BIR tax obligations — the certificate is proof of tax paid, not a substitute for filing. Sellers who receive certificates from multiple platforms should reconcile every BIR Form 2307 against their books before filing, and attach a Summary Alphalist of Withholding Tax (SAWT) where the BIR requires one to support the credit claimed.
Frequently asked questions #
What withholding tax rate applies to online sellers under RR No. 16-2023? #
Electronic marketplace operators and digital financial services providers (DFSPs) withhold creditable withholding tax on gross remittances to online sellers and merchants at an effective rate of 0.5% — originally computed as 1% on one-half of gross remittances under RR No. 16-2023, and restated as a flat 0.5% of the full gross remittance under RR No. 5-2025.
Does every online seller get taxed, or is there an exemption threshold? #
No. RR No. 16-2023 exempts a seller from this withholding if their cumulative gross remittances for the taxable year have not exceeded ₱500,000, and that threshold is tracked across all e-marketplace operators and DFSPs the seller uses, not per platform. Once the ₱500,000 mark is crossed, withholding applies only to the remittances that exceed it, not retroactively to the exempt portion.
Who withholds the tax — the marketplace or the online seller? #
The e-marketplace operator or DFSP is the withholding agent, not the seller. The platform deducts the tax from the seller’s payout before remittance, remits it to the BIR, and issues BIR Form 2307 to the seller as proof of the amount withheld.
How does a seller reach the ₱500,000 exemption threshold status? #
A seller who expects to stay under ₱500,000 in cumulative gross remittances for the year submits a BIR-received Sworn Declaration of Gross Remittances to each e-marketplace operator or DFSP they sell through. Without that declaration on file, or once actual remittances cross the threshold, the platform must withhold on the excess.
What does an online seller do with the BIR Form 2307 received from a marketplace? #
The seller keeps the certificate as proof of creditable withholding tax already paid on their behalf and deducts the amount shown from their income tax due when filing BIR Form 1701, 1701Q, 1701A, or the corporate equivalent, supported by the certificate and the Summary Alphalist of Withholding Tax (SAWT) where required.
Is this the same requirement as the alphalist rules in RMC No. 55-2026? #
No. This withholding-certificate mechanic — the rate, threshold, and BIR Form 2307 issuance — comes from RR No. 16-2023 and RR No. 5-2025. RMC No. 55-2026 is a separate but related reminder that the same e-marketplace operators and DFSPs must also attach an alphalist of payees to their withholding tax returns; the two obligations run side by side on the same withheld amounts.
Summary #
An online seller does not owe withholding on the first ₱500,000 of cumulative gross remittances in a taxable year — past that, the e-marketplace operator or DFSP paying them, not the seller, must withhold an effective 0.5% (originally 1% on half the remittance under RR No. 16-2023, flattened to 0.5% of the full amount by RR No. 5-2025) and issue BIR Form 2307 using ATC WI820/WC820 (e-marketplace) or WI830/WC830 (DFSP). Track cumulative remittances across every platform, file a Sworn Declaration if you expect to stay under the threshold, and credit every certificate received against your income tax return. For the pillar on the certificate itself, see What Is BIR Form 2307; for the related alphalist filing duty, see RMC No. 55-2026.