Quick answer
Online sellers in the Philippines must register with the BIR like any business, issue invoices, and file returns. Under Revenue Regulations No. 16-2023, effective January 2024, e-marketplaces such as Shopee, Lazada and TikTok Shop withhold 1% on one-half of each seller's gross remittances (effectively 0.5%). Sellers whose annual gross remittances are ₱500,000 or less are exempt from this withholding if they submit a sworn declaration. Withheld amounts are credited against your income tax using BIR Form 2307.
Key takeaways
- Selling online is a business: register with BIR (Form 1901), plus DTI and your LGU if you use a business name or have a location.
- Platforms withhold 1% on 50% of gross remittances, effectively 0.5% of sales, under RR 16-2023.
- Exemption: sellers with ₱500,000 or less in annual gross remittances who submit a sworn declaration and registration documents to the platform.
- The withholding is not an extra tax; claim it as a credit using the Form 2307 the platform issues.
- Small sellers with gross sales up to ₱3 million can choose the 8% income tax option.
On this page
- Step 1: Register your online business
- Step 2: Understand the platform withholding (RR 16-2023)
- Step 3: Claim the exemption if you qualify
- Step 4: Choose your income tax option
- Step 5: Issue invoices and keep records
- Step 6: File on time
- When you'll need to register for VAT
- Common mistakes
- Frequently asked questions
- Sources
Selling on Shopee, Lazada, TikTok Shop and Facebook has become a full-time income for many Filipinos. Since 2024, the platforms have been part of the tax system too: they withhold a small amount from sellers' payouts and report it to the BIR. Here's what that means for you and how to stay compliant without overpaying.
Step 1: Register your online business
Online sellers follow the same registration path as any small business:
- DTI business name, if you'll use a shop name other than your own (₱200–₱2,000 + ₱30 DST).
- Barangay clearance and mayor's permit, according to your LGU's rules for home-based or online businesses.
- BIR registration using Form 1901 through ORUS, which gives you a Certificate of Registration (Form 2303), books of accounts and invoices.
Full steps: how to register a business in the Philippines.
Platforms also verify sellers under the Internet Transactions Act (RA 11967), so having a DTI certificate and BIR registration makes onboarding and payouts smoother.
Step 2: Understand the platform withholding (RR 16-2023)
Since January 2024, e-marketplace operators and digital financial services providers must withhold tax on payouts to sellers:
| Item | Rule |
|---|---|
| Who withholds | E-marketplaces (e.g., Shopee, Lazada, TikTok Shop) and digital financial service providers acting for merchants |
| Rate | 1% |
| Base | One-half of gross remittances to the seller |
| Effective rate | About 0.5% of gross remittances |
| Exemption | Sellers with annual gross remittances ₱500,000 or less, upon submission of a sworn declaration |
| Proof | BIR Form 2307 issued by the platform |
Example: your Shopee gross remittances for a quarter are ₱300,000.
- Base: ½ × ₱300,000 = ₱150,000
- Withheld: 1% × ₱150,000 = ₱1,500
- You receive Form 2307 for ₱1,500 and deduct it from your income tax due.
Step 3: Claim the exemption if you qualify
If your total gross remittances from all platforms for the year are ₱500,000 or less:
- Prepare a sworn declaration of your gross remittances (each platform provides a template or instructions).
- Submit it with your BIR Certificate of Registration through the platform's seller center.
- Keep copies. Once you exceed ₱500,000 during the year, notify the platform; withholding will then apply.
Step 4: Choose your income tax option
| 8% income tax | Graduated rates + 3% percentage tax | |
|---|---|---|
| Eligible if | Gross sales ≤ ₱3M, non-VAT | Anyone |
| Tax | 8% × (gross sales − ₱250,000) | Graduated rates on net income + 3% of gross sales |
| Best for | Low-cost products, service-like margins, simple records | Sellers with high, well-documented costs (inventory, shipping, ads) |
Because online sellers often have high inventory costs, run the numbers. Example with ₱1,200,000 gross sales and ₱800,000 in documented costs of goods and expenses:
- 8% option: 8% × (₱1,200,000 − ₱250,000) = ₱76,000
- Graduated: net income ₱400,000 → ₱22,500 income tax + ₱36,000 percentage tax (3%) = ₱58,500
Here graduated rates win, but only if you keep complete records and receipts for those costs. The election is made on your first quarterly return of the year. See the freelancer 8% guide for how elections work.
Step 5: Issue invoices and keep records
- Issue a BIR-registered invoice for each sale. Many sellers use an approved electronic invoicing system or the platform's invoice tools if they meet BIR requirements.
- Record sales and expenses in your books of accounts.
- Download settlement reports and Form 2307s from every platform each quarter.
- Keep supplier receipts and shipping and ad invoices if you're on graduated rates.
Step 6: File on time
| Return | When |
|---|---|
| 1701Q (quarterly income tax) | May 15, Aug 15, Nov 15 |
| 2551Q (percentage tax, if not on 8%) | Quarterly, within 25 days after quarter end |
| 1701 / 1701A (annual) | April 15 |
Attach or list your Form 2307 credits so the withheld amounts reduce what you pay.
When you'll need to register for VAT
If your gross sales exceed ₱3 million in any 12-month period, you must register for VAT (12%) and you lose the 8% option. Plan pricing before you cross the threshold. See how to price your products.
Common mistakes
- Ignoring Form 2307s, which means paying tax twice on the same income.
- Not submitting the ₱500,000 declaration when eligible.
- Mixing personal and shop money in one account, which makes records unreliable.
- Choosing 8% automatically when your costs are high and documented.
Frequently asked questions
Do I need to register with BIR if I sell on Shopee or Lazada?
Yes, if you sell as a regular business. The BIR treats online selling the same as physical selling. You'll register as self-employed (Form 1901), issue invoices, and file quarterly and annual returns.
How much tax does Shopee or Lazada deduct?
Under RR 16-2023, they withhold 1% on one-half of your gross remittances, which is about 0.5% of your gross sales, unless you qualify for the ₱500,000 exemption and have submitted the required documents.
How do I avoid the 1% withholding as a small seller?
If your annual gross remittances from all platforms are ₱500,000 or less, submit a sworn declaration of gross remittances together with your BIR Certificate of Registration to each platform. Once your remittances exceed ₱500,000 in a year, withholding applies.
What is BIR Form 2307 and why does it matter?
It's the Certificate of Creditable Tax Withheld at Source. The platform issues it for amounts it withheld from you. You use it to reduce the income tax you pay on your quarterly and annual returns, so download and keep it.
Do I need to register if I only sell occasionally?
A one-time sale of personal items isn't a business. But if you sell regularly to earn income, even part-time or from home, you're expected to register.
Sources
Figures checked against these official and primary sources on October 4, 2026. Government rates and promos change, so confirm on the agency's site before you act.
- Bureau of Internal Revenue: Revenue Regulations No. 16-2023 and RMC 8-2024
- Global Compliance News (Baker McKenzie): BIR clarifies withholding on e-marketplace remittances
- BIR Online Registration and Update System (ORUS)
- Republic Act No. 11967, Internet Transactions Act of 2023
General information, not personal financial, tax or legal advice. See our editorial standards and disclaimer. Found an outdated figure? Email support@success.ph.