Taxes for Online Sellers: What Actually Applies to You

If you sell online in the Philippines, whether on Shopee, Lazada, TikTok Shop, Facebook, or your own website, you must register with the Bureau of Internal Revenue (BIR) and pay the appropriate taxes. The good news: the rules are clearer now, and many small sellers qualify for simplified tax options. Here’s what actually applies to you in 2026.

Who must register with the BIR?
You must register with the BIR if you regularly sell goods or services online, even if you don’t have a physical store. This covers sales via marketplaces, social media, messaging apps, livestreams, or personal websites. Register on or before you start selling.

Key points:

Individuals selling under their own name use BIR Form 1901 and register at the Revenue District Office (RDO) covering their residence.

If you use a brand or trade name, secure a DTI Certificate of Registration first, then register with BIR within 30 days.

As of 2024-2026, the old ₱500 annual registration fee has been removed. You only pay a ₱30 documentary stamp tax on the Certificate of Registration.

Online sellers must display a BIR Registration Seal Badge (with QR) on each shop/page, per RMC 91-2024 and 2026 guidance.

Which taxes apply to online sellers?
Your tax obligations depend on your annual gross sales and your chosen tax regime.

1) Income tax (on your net profit)
All business income is subject to income tax. For individuals, you generally have two main paths:

8% flat tax option (if gross sales/receipts ≤ ₱3,000,000): You can opt for an 8% tax on gross sales/receipts instead of the graduated income tax rates and percentage tax. This is popular for small online sellers because it’s simple and often lower.

Graduated income tax rates (0%-35%): If you don’t elect the 8% option or if you exceed the threshold, you’re taxed on taxable income using the regular brackets.

Note: The 8% option has specific filing mechanics and may not apply if you’re VAT-registered. Confirm with your RDO or a tax professional.

2) Percentage tax or VAT (on your sales)
This is where many sellers get confused. The rule of thumb:

Gross annual sales ≤ ₱3,000,000: You’re generally not VAT-registered and may be subject to percentage tax (unless you chose the 8% flat tax, which can replace percentage tax).

Gross annual sales > ₱3,000,000: You must register for 12% VAT and file VAT returns.

Important nuance: If you qualify and opt for the 8% income tax on gross sales, you may be exempt from percentage tax, but you still must track whether you cross the VAT threshold.

3) Withholding taxes and platform remittances
Marketplaces and payment processors may withhold taxes on your payouts under BIR rules (e.g., RR 16-2023 and related guidance on e-commerce). These withholdings are credits against your final tax due, so keep records of platform statements and withholding certificates.

What you must do to stay compliant

• Register before selling: Get your TIN (if you don’t have one), file BIR Form 1901, and secure your Certificate of Registration (COR).
• Declare all store names: Under RMC 91-2024, you must register all business/trade names and declare every online page/account/store name you use.
• Issue proper receipts/invoices: Use BIR-registered invoices or an Authority to Print. Many sellers now move toward electronic invoicing as mandates expand.
• Post your BIR badge: Display the official BIR Registration Seal Badge with QR on each online shop/page.
• Keep books and file on time: Maintain books of accounts and file quarterly/annual returns (income tax, percentage tax/VAT, and any withholding).

Quick checklist for new online sellers

• DTI business name (if using a brand) → then BIR registration within 30 days.
• BIR Form 1901 + valid ID + proof of address; pay ₱30 DST for COR.
• Choose your tax regime (8% flat vs graduated; percentage tax vs VAT) based on expected gross sales.
• Set up invoicing/receipts and plan for e-invoicing if applicable.
• Display BIR badge on all pages/accounts.
• Track gross sales monthly to know when you approach the ₱3M VAT threshold.