THE imposition of withholding taxes on online vendors could boost the revenue collection of the Bureau of Internal Revenue (BIR) and allow the agency to hit next year's target.

"It will be easier for us [to attain the goal] if the online process goes well. We expect that there will be a lot of transactions online, and we've seen that while the Bureau of Internal Revenue's tax efficiency is improving," Tax chief Romeo Lumagui Jr. told reporters at the sidelines of the bureau's 120th anniversary on Thursday.

"The collections are not as high, because many purchases have shifted from traditional to online. So, there are many transactions online that the BIR isn't capturing, that's why we are focusing on taxing those on online platforms," he added.

The Budget of Expenditures and Sources of Financing for fiscal year 2025 shows that the bureau is tasked to collect P3.23 trillion next year, higher than the P3.05 trillion this year.

Lumagui said that he was more confident of hitting next year's goal as they had put in place more projects and programs to raise revenues.

The bureau implemented the 1.0-percent withholding tax on online platform providers last month.

Meanwhile, small online sellers with transactions of under half a million pesos annually are exempt from the 1-percent tax on half of the gross remittances made by e-marketplace operators and digital financial services providers for goods or services sold through their platform.

An exemption also applies if the seller or merchant does not have to pay or is subject to a lower income tax rate as per any existing law or treaty.

The bureau said that gross remittances of P500,000 included the combined amount of remittances received by the seller or merchant for the sale of goods and services from all e-marketplace operators and digital financial services providers.

"So, the immediate effect of that, of course, will be a bit of a challenge and sacrifice for the collection target. But in the long run, we will see that it will help. So in the next few years, hopefully, it will pick up," Lumagui said.

"Especially with all the changes that we're implementing, I think the performance will be quite good in the coming years," he added.

The tax chief also stressed that hitting this year's collection goal remained a challenge for them. The bureau needs to collect P3.05 trillion this year.

As of the first half of 2024, the bureau has already collected P1.36 trillion, 2.92 percent lower than the programmed P1.403 trillion, but 11.7 percent higher than P1.219.2 trillion in the same period last year.

In June alone, the bureau has so far collected P172.5 billion, 4.71 percent higher than the P164.7 billion in the same month last year.

"If we talk about the collection target [this year], it is still quite challenging, that's why we continue to intensify our activities to achieve it, especially the withholding tax on online transactions, since that is now effective. We expect it to significantly contribute," Lumagui said.