Philippines Enacts VAT on Nonresident Digital Service Providers: What You Need to Know

• Republic Act No. 12023 imposes VAT on digital services consumed within the Philippines by nonresident DSPs
• The law requires the BIR to establish a simplified automated VAT registration system for nonresident DSPs
• Digital services covered include online search engines, online marketplaces, cloud services, online media, online platforms, and digital goods
• Nonresident DSPs must register for VAT if their gross sales exceed PHP 3 million in the past 12 months
• In business-to-consumer transactions, DSPs are responsible for assessing, collecting, and remitting VAT
• In business-to-business transactions, the reverse charge mechanism applies for VAT on digital services consumed in the Philippines
• Online marketplaces are liable to remit VAT on transactions of nonresident sellers on their platform
• Certain digital services, such as online courses and seminars, are VAT exempt

Source: insightplus.bakermckenzie.com

Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.

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