The 1% BIR Withholding Tax on Shopee Sellers, Explained — And How to Get It Back

By Jerome Ko · Last updated June 25, 2026 · Sources & methodology

If you have been selling on Shopee for a while and noticed that your actual payout is slightly lower than what you calculated, one possible reason is the BIR's creditable withholding tax on e-marketplace sellers. Since 2024, Shopee deducts this on your behalf and remits it to the Bureau of Internal Revenue. Many sellers either do not know it exists, or assume it is an extra cost they can do nothing about. Neither assumption is correct.

This guide walks through exactly what Revenue Regulation 16-2023 requires, how the math works, when you are exempt, and — critically — how to claim back every peso withheld through BIR Form 2307. If you are still trying to make sense of all the deductions on your payout — not just BIR withholding — see Why Is My Shopee Payout Lower Than Expected? and, if you are comparing platforms, Shopee vs Lazada vs TikTok Shop Fees.

What RR 16-2023 Actually Says

The BIR issued Revenue Regulation 16-2023 to require Philippine e-marketplaces — Shopee, Lazada, and similar platforms — to act as withholding agents for their sellers. The rule came into practical effect mid-2024 following transition guidance in Revenue Memorandum Circular 55-2024.

The key mechanics:

• The withholding rate is 1%, but it is applied to one-half of the seller's gross remittances — not the full amount.
• This makes the effective rate approximately 0.5% of gross remittances (1% × 50% = 0.5%).
• The tax is creditable — meaning Shopee holds it on your behalf and forwards it to the BIR, and you later reclaim it as a credit against your income tax due.
• It applies regardless of whether you are VAT-registered or not (more on the VAT myth below).

For a technical breakdown from professional tax sources, see Grant Thornton Philippines and PwC's Worldwide Tax Summaries — Philippines.

The ₱500,000 De-Minimis: When No Withholding Applies

Not every Shopee seller is subject to withholding. The regulation provides a de-minimis exemption: if your cumulative gross remittances for the calendar year do not exceed ₱500,000, Shopee is not required to withhold — provided you submit a sworn declaration confirming you qualify for the exemption.

Practically, this means:

• If your total Shopee payouts for the year stay below ₱500,000 and you submit the sworn declaration, nothing is withheld.
• Once your cumulative remittances cross ₱500,000 in a calendar year, Shopee begins withholding on payouts from that point forward.
• If you did not submit a sworn declaration, Shopee may withhold from an earlier point. Check your Seller Centre for the current declaration form and deadline.

Worked Example: One Quarter of Orders

Let us walk through a concrete scenario. Suppose you had the following gross remittances from Shopee across a single quarter (after Shopee deducted its platform fees):

In this example, ₱657.50 was withheld and forwarded to the BIR during Q1. At year-end, Shopee will issue you a BIR Form 2307 documenting the total amount withheld across all quarters. In a full year at this sales level — roughly ₱526,000 in gross remittances — total withholding would be approximately ₱2,630.

That ₱2,630 is not gone. You will get it back (or reduce your tax bill by that exact amount) when you file your annual income tax return — as long as you know how to use Form 2307.

Notice that this seller's cumulative remittances exceeded ₱500,000 partway through the year. That is exactly when withholding kicks in, assuming no valid sworn declaration was on file.

How Form 2307 Credits the Amount Back

The creditable withholding tax mechanism works like a prepayment of income tax. Here is how to think about it step by step:

1. Shopee withholds and remits. Each time a qualifying payout triggers withholding, Shopee deducts the computed amount and remits it directly to the BIR. You can see these deductions in your Seller Centre remittance records.
2. Shopee issues Form 2307. At the end of each taxable period, Shopee provides you with a Certificate of Creditable Tax Withheld at Source (BIR Form 2307). This document states the exact peso amount withheld and remitted on your behalf.
3. You file your annual income tax return. Whether you file BIR Form 1701 (graduated rate) or Form 1701A (8% flat option), there is a section for creditable withholding taxes. Enter the amount from your Form 2307 there.
4. Your tax due is reduced peso-for-peso. If your computed income tax for the year is, say, ₱15,000 and you have ₱2,630 in creditable withholding taxes from Shopee, your actual amount still owed becomes ₱12,370.
5. If credits exceed tax due. You can carry the excess forward to the next taxable period, or file for a refund — although refund claims involve additional BIR process steps.

The Three Thresholds — Do Not Mix Them Up

Philippine tax rules for online sellers involve three different peso thresholds, and sellers frequently confuse them. They serve completely separate purposes:

A seller earning ₱600,000 in gross Shopee remittances is subject to the ₱500,000 withholding trigger but is nowhere near the VAT threshold. A seller earning ₱200,000 is below all three. These thresholds are independent; crossing one does not automatically mean you have crossed the others.

If you are unsure which taxes apply to your situation, the BIR registration guide for Shopee sellers covers registration requirements in full. For sellers deciding between the 8% flat income tax and the percentage tax regime, see 8% vs Percentage Tax for Shopee Sellers.

Timeline: When Did This Actually Start?

RR 16-2023 was issued in 2023 but the transition to full implementation for e-marketplaces took until mid-2024. Revenue Memorandum Circular 55-2024 provided clarifications and gave platforms like Shopee additional time to build the compliance infrastructure. If you sold on Shopee before mid-2024 and saw no withholding, that is why. By late 2024, withholding was generally active for qualifying sellers.

Tax regulations update frequently. Always verify the current applicable rules directly with the Bureau of Internal Revenue and your Shopee Seller Centre, as implementation details may have changed since this article was last updated.

Correcting the VAT Myth

A common misconception circulating in Shopee seller groups is that the 1% withholding tax only applies to VAT-registered sellers. This is incorrect.

RR 16-2023 does not limit the withholding obligation to VAT-registered sellers. It applies to all sellers whose cumulative gross remittances exceed the ₱500,000 de-minimis threshold, regardless of VAT status. The VAT-registration threshold (₱3,000,000 in annual gross sales) is a separate rule entirely and has no bearing on whether Shopee withholds under RR 16-2023.

If you are a non-VAT seller earning more than ₱500,000 in Shopee payouts annually — and you have not filed a sworn declaration — you are subject to withholding. The good news remains the same: it is creditable, and you recover it on your income tax return.

What This Means for Your Payout Calculations

The withholding tax is one more reason your Shopee payout can end up lower than you expected from the selling price alone. The platform fees — commission, transaction fee, shipping subsidy — are visible in the complete payout breakdown once you know where to look. Note that as of May 11, 2026, the Coins Cashback service fee (old rate: 3.36%) has been abolished and replaced by the Seller Growth Support Fee (~1%–1.5%), which also appears as a payout deduction. The BIR withholding is a separate layer on top of those platform deductions.

Importantly, the withholding tax is not a permanent cost. It is a cash-flow timing difference: Shopee holds a small portion of your earnings and sends it to the BIR now, then you recover it when you file your return. For sellers with tight working capital, however, that timing difference is worth planning for.

Quick Summary

• RR 16-2023 requires Shopee to withhold 1% of one-half of your gross remittances — an effective rate of 0.5%.
• No withholding applies if your cumulative annual remittances stay below ₱500,000 and you submit a valid sworn declaration.
• The withheld amount is creditable — not a final or extra tax. You reclaim it via BIR Form 2307 when filing your income tax return.
• The ₱500,000 threshold is separate from the ₱250,000 income-tax floor and the ₱3,000,000 VAT threshold. Do not conflate them.
• The rule applies to all sellers, not just VAT-registered ones.
• Full implementation rolled out mid-2024; verify current rules with the BIR directly.