Do Online Sellers Pay VAT on Shopee, Lazada, or TikTok Shop Platform Fees?

Yes — the commission or platform fee that Shopee, Lazada, or TikTok Shop deducts from a seller’s settlement is a service fee, and service fees rendered by a VAT-registered entity are subject to 12% VAT under NIRC Section 108. That VAT is separate from, and charged on a different amount than, the 0.5% creditable withholding tax the platform also deducts from the seller’s own sales proceeds under RR No. 16-2023. Sellers who only track their net payout often can’t tell the two apart on a settlement report — this guide separates them and works through both on a single sale.

What exactly is a seller paying VAT on here? #

A seller on Shopee, Lazada, or TikTok Shop is involved in two separate transactions each time an order is fulfilled: the seller’s own sale of goods to the customer, and the platform’s service of running the marketplace that made the sale possible. Each transaction can carry its own VAT.

Under NIRC Section 108, VAT applies to the gross receipts of a person rendering services in the course of trade or business:

“There shall be levied, assessed and collected, a value-added tax equivalent to twelve percent (12%) of gross receipts derived from the sale or exchange of services, including the use or lease of properties.” — NIRC Section 108(A), as amended

The platform’s commission is exactly that kind of receipt — payment for the service of listing, processing, and settling the seller’s sale — so it falls squarely under Section 108, separate from whatever VAT treatment applies to the goods the seller is selling.

Is the platform commission itself VAT-inclusive or added on top? #

Both Shopee and Lazada publish their seller commission rates as VAT-inclusive, meaning the published percentage already has the 12% VAT built in rather than added as a separate line item on top of the quoted rate. A seller looking at a settlement report that shows “commission: 10% of gross sale” is looking at a figure that already contains the platform’s output VAT — it isn’t charged separately after the fact.

This matters for two reasons: first, sellers shouldn’t expect to see VAT broken out as a distinct deduction on every settlement line even though it’s there; second, a VAT-registered seller who wants to credit that VAT needs the platform’s own invoice or statement showing the VAT component, not just the net commission figure buried in a settlement summary.

Can a seller credit the VAT embedded in the platform’s fee? #

A seller can only claim input VAT on the platform commission if two conditions are both met: the seller is itself VAT-registered, and the seller holds a proper invoice from the platform substantiating the VAT paid. Since RA No. 11976 (the Ease of Paying Taxes Act) took effect, the invoicing document for services has shifted from the old Official Receipt to a unified Sales Invoice:

“A VAT-registered person shall issue a VAT invoice for every sale, barter, exchange, or lease of goods or properties and for every sale, barter or exchange of services.” — NIRC Section 113(A), as amended by RA No. 11976

A seller registered for VAT can use that invoice (or the platform’s equivalent tax statement) to claim the commission’s VAT component as input tax against the output VAT owed on the seller’s own sales. A seller who is not VAT-registered — filing percentage tax instead, because they’re below the ₱3,000,000 threshold — has no output VAT to offset it against, so the VAT embedded in the commission is simply absorbed as part of the cost of selling on the platform.

How does this differ from the 0.5% withholding under RR No. 16-2023? #

The VAT on the platform’s commission and the withholding tax on the seller’s payout are frequently confused because both show up as deductions on the same settlement report, but they tax different amounts for different reasons.

Revenue Regulations No. 16-2023 requires e-marketplace operators and digital financial services providers to withhold 1% of one-half of the gross remittance paid to a seller — an effective 0.5% of the seller’s gross sales — as a creditable withholding tax on the seller’s own income, credited against the seller’s income tax due at year-end:

“On one-half (½) of the gross remittances by e-marketplace operators and digital financial services providers to the sellers/merchants for the goods or services sold/paid through their platform/facility — One percent (1%).” — RR No. 16-2023, amending Section 2.57.2 of RR No. 2-98

This withholding does not apply if a seller’s cumulative gross remittances for the year have not exceeded ₱500,000. It is also unrelated to VAT: it is a prepayment of the seller’s income tax, deducted from what the platform pays the seller for the seller’s own sales — not a tax on the platform’s commission at all.

The two obligations compared:

A worked example #

A seller makes a ₱50,000 gross sale through a platform that charges a 10% commission, VAT-inclusive, and the seller is VAT-registered and has already exceeded the ₱500,000 remittance threshold for the year.

Seller’s own VAT on the sale (assuming a VAT-exclusive selling price):

Platform’s commission (10% of gross sale, VAT-inclusive):

0.5% withholding under RR No. 16-2023 (on gross remittance, separate from VAT):

If the seller has the platform’s VAT invoice for the commission, the ₱535.71 input VAT reduces the ₱6,000 output VAT otherwise due on this sale, and the ₱250 withheld is separately credited against income tax at year-end using the BIR Form 2307 the platform issues. Without that VAT invoice, the seller can’t credit the ₱535.71 and it’s effectively lost as a cost of the ₱5,000 commission.

Why doesn’t RA No. 12023 cover this? #

RA No. 12023 and its implementing RR No. 3-2025 impose 12% VAT on digital services rendered by nonresident digital service providers with no local VAT registration — think foreign subscription platforms with no Philippine entity. Shopee, Lazada, and TikTok Shop operate in the Philippines through locally registered entities that are already VAT-registered taxpayers subject to the ordinary domestic VAT rules under NIRC Section 108, which have applied to services rendered in the Philippines for decades. The commission these platforms charge Philippine sellers isn’t a new category of tax created by RA No. 12023 — it’s the same Section 108 VAT that’s applied to locally rendered services all along.

How do sellers keep the VAT and withholding split straight in their own records? #

Most sellers track their platform settlements in a spreadsheet, then convert that spreadsheet into a DAT file for RELIEF or alphalist filing — but a plain BIR Excel Uploader only converts whatever numbers are typed into the sheet; it doesn’t compute or separate the commission’s VAT component from the 0.5% withholding described above. If gross sales, commission, VAT, and withholding aren’t already broken out correctly in the source spreadsheet, a generic Excel-to-DAT converter will faithfully carry that same mixed-up figure straight into the filed DAT file.

A seller generating their own BIR Form 2307 for a buyer, or building a SAWT to claim the withholding a platform issued, benefits from a workflow where the certificate and the underlying sale are tracked together rather than re-keyed from a settlement PDF each time. The BIR Online Tools platform keeps Form 2307 generation, SAWT, and RELIEF/alphalist DAT modules in one account, so figures carried from one to the other come from the same record instead of being retyped and potentially mismatched along the way.

Frequently asked questions #

Is the commission Shopee or Lazada charges a seller subject to VAT? #

Yes. The commission or platform fee a local e-marketplace charges is payment for a service — facilitating the sale — and is subject to 12% VAT under NIRC Section 108 if the platform entity is VAT-registered. Both Shopee and Lazada describe their published seller fees as VAT-inclusive, meaning the 12% is already built into the percentage charged.

Can a seller claim input VAT on the platform commission? #

Only if the seller is VAT-registered and holds a proper VAT invoice or the equivalent statement from the platform showing the VAT component of the fee, under the invoicing rules in NIRC Section 113 as amended by RA No. 11976 (the Ease of Paying Taxes Act). A non-VAT seller paying percentage tax cannot credit that VAT and simply absorbs it as a cost.

Is the platform commission VAT the same as the 0.5% withholding tax under RR No. 16-2023? #

No, they are two different obligations on two different amounts. VAT on the commission is a tax the platform charges the seller for the service of running the marketplace. The 0.5% (1% on half the gross remittance) under RR No. 16-2023 is a creditable withholding tax the platform deducts from what it pays the seller for the seller’s own sales, remitted to the BIR on the seller’s behalf.

Does every online seller owe VAT on their own sales? #

Only if the seller is VAT-registered or has exceeded the ₱3,000,000 annual gross sales/receipts threshold that requires VAT registration. A seller below that threshold generally pays percentage tax instead of VAT on their own sales, though the platform’s commission fee may still carry VAT charged by the platform itself, which the seller cannot credit if the seller isn’t VAT-registered.

Does RA No. 12023 (the VAT on digital services law) apply to Shopee or Lazada’s commission? #

Generally no. RA No. 12023 and RR No. 3-2025 target nonresident digital service providers selling into the Philippines — foreign platforms with no local VAT registration. Shopee and Lazada operate through Philippine-registered entities that are already subject to the regular domestic VAT rules under NIRC Section 108, so their commission fees fall under that existing framework rather than the newer nonresident-DSP regime.

Summary #

The commission a marketplace deducts from a seller’s settlement carries its own 12% VAT under NIRC Section 108, separate from the 0.5% creditable withholding tax RR No. 16-2023 imposes on the seller’s own remittance — and only a VAT-registered seller with proper documentation can recover the first one. See BIR Form 2307 for Online Sellers: The 0.5% E-Marketplace and DFSP Withholding Tax Under RR No. 16-2023 for how that withholding certificate works, and How Online Sellers Consolidate BIR Form 2307 Certificates From Shopee, Lazada, and TikTok Shop Using BIR Online Tools for turning those certificates into a filing-ready record.