This guide is for Filipino individuals selling goods on Shopee, Lazada, TikTok Shop, Facebook or their own website, with yearly sales up to ₱3,000,000. It is not for sellers operating through a corporation or partnership, VAT-registered sellers or those above ₱3,000,000 (see VAT in the Philippines), foreign sellers, or creators paid for content rather than goods (see the content creators guide). If you have received a BIR assessment, take it to a tax practitioner.
Do you need to register, and what does it cost?
Yes, every online seller registers before selling. RR 16-2023 says "All online sellers/merchants shall register with the BIR on or before the commencement of business in an e-marketplace platform", and marketplaces must collect your Certificate of Registration (Form 2303) as part of seller accreditation.
Registration is BIR Form 1901 at your RDO or online through ORUS. The only BIR charge is the ₱30 loose documentary stamp tax (BIR guide); the old ₱500 annual registration fee was removed by the Ease of Paying Taxes Act (BIR EOPT flyer). Under RMC 38-2026 your registration should carry PSIC 47913, "Retail sale via internet", and you post a free BIR Registration Seal Badge on your shop page instead of your full COR.
How much tax: 8% or graduated plus 3%
The cheaper regime depends on your margin. With yearly sales up to ₱3,000,000 and no VAT registration, you choose:
- 8% option: 8% of gross sales over ₱250,000, "in lieu of the graduated income tax rates ... and the percentage tax under Section 116" (RA 10963, NIRC Sec. 24(A)(2)(b)). No costs are deducted, not even the goods you bought to resell.
- Graduated plus 3%: the 2023 graduated table on net income (NIRC Sec. 24(A)(2)), plus 3% of gross quarterly sales (NIRC Sec. 116 as amended by RA 11976). Net income is sales minus cost of goods and receipted expenses, or sales minus the 40% Optional Standard Deduction (NIRC Sec. 34(L)).
Worked example (illustrative Shopee and Lazada seller, 2026): sales ₱1,200,000, all remitted through the platforms; cost of goods ₱780,000; other receipted expenses (packaging, ads, platform fees) ₱120,000. Remittances exceeded ₱500,000 last year, so the seller has no Sworn Declaration and every 2026 remittance is withheld.
| Regime | Working | Tax for the year |
|---|---|---|
| 8% option | (₱1,200,000 minus ₱250,000) x 8% | ₱76,000 |
| Graduated, itemized | Net ₱300,000: 15% of ₱50,000 = ₱7,500; plus 3% of ₱1,200,000 = ₱36,000 | ₱43,500 |
| Graduated, 40% OSD | Net ₱720,000: ₱22,500 + 20% of ₱320,000 = ₱86,500; plus ₱36,000 | ₱122,500 |
Itemizing wins by ₱32,500 because cost of goods is 65% of sales and the 8% base ignores it. A seller of digital products with few costs would see the opposite. The OSD is the worst choice here because 40% is far below this seller's real costs. Run your own figures on the income tax calculator and the percentage tax calculator.
Small sellers: on ₱240,000 of yearly sales, 8% gives ₱0 tax. Graduated with the OSD also gives ₱0 income tax, but the 3% percentage tax still costs ₱7,200, so 8% is cheaper. The ₱250,000 figure is an income tax band, not a sales exemption.
Election: in your first year, choose 8% on Form 1901 or on your first quarter return; in later years, on the first quarter return or with Form 1905 at the start of the year (BIR guide). The RR 8-2018 digest makes the choice "irrevocable" for the year.
The marketplace withholding (RR 16-2023)
Shopee, Lazada and other e-marketplaces deduct an advance on your income tax from payouts. RR 16-2023 imposes "One percent (1%)" on "one-half (1/2) of the gross remittances" to sellers, so the effective rate is 0.5% of what the platform remits. It took effect January 11, 2024 (RMC 8-2024).
It does not apply (RR 16-2023) in any of three cases: your "annual total gross remittances ... for the past taxable year" did not exceed ₱500,000; or your "cumulative gross remittances" this year have not yet exceeded ₱500,000; or you hold proof of exemption or a lower income tax rate. RMC 8-2024 adds three working rules:
- The ₱500,000 is "the total amount of remittances received by the online seller/merchant from e-marketplace operators and DFSPs", across all platforms, not per platform.
- To stay unwithheld you must give each platform a BIR-received Sworn Declaration that you will not exceed ₱500,000, renewed "on or before the 20th day of the first month of each taxable year". Without it, the tax is deducted "regardless of the actual total income".
- Once a platform sees you pass ₱500,000, withholding starts with "the particular remittance exceeding the said threshold" and every remittance after it.
"Gross remittance" excludes sales returns and discounts, separately billed shipping fees, VAT and the platform's own fees. In the example, ₱1,200,000 x 50% x 1% = ₱6,000 withheld. RR 16-2023 states the tax withheld "is income tax", borne by the seller. Each platform must give you BIR Form 2307 (RMC 8-2024), the Certificate of Creditable Tax Withheld at Source, and you claim it on your returns with the Summary Alphalist of Withholding Tax (SAWT) (BIR guide). Under graduated itemized, income tax still due drops from ₱7,500 to ₱1,500; under 8%, from ₱76,000 to ₱70,000.
What you file and when
| Return | Deadline | Applies to |
|---|---|---|
| Form 2551Q, 3% percentage tax | April 25, July 25, October 25, January 25 | Graduated rates only |
| Form 1701Q, quarterly income tax | May 15, August 15, November 15 | Everyone |
| Form 1701A (8% or OSD) or Form 1701 (itemized) | April 15 of the following year | Everyone |
Source: the filing schedule in the BIR Taxpayer's Guide for Online Sellers and NIRC Sec. 128 as amended by RA 11976.
Once yearly sales pass ₱3,000,000 the 8% option and the 3% percentage tax no longer apply and VAT rules take over (NIRC Sec. 109(CC), RA 11976).
Next steps
- Register with Form 1901 and PSIC 47913: follow the BIR registration walkthrough.
- Estimate your margin, then compare regimes on the income tax calculator before your first quarter return.
- Download each platform's Form 2307 every quarter and check the amounts on the withholding tax calculator.
- Add the dates from quarterly tax deadlines to your calendar.
How to tell it worked: your COR or eCOR shows PSIC 47913 and a QR code that resolves to verify.bir.gov.ph, your Seal Badge is on your shop page, and the 2307 totals from your platforms match the withholding credited on your returns. If a platform withheld while your total remittances were under ₱500,000, check that it has your BIR-received Sworn Declaration for the year.