- The Philippines imposes a 12% VAT on digital services provided by resident and nonresident digital service providers (DSPs) where the services are consumed in the Philippines.
- Covered services include online search engines, online marketplaces, cloud services, digital goods, e-learning platforms and online advertising.
- Certain digital services are VAT-exempt, including accredited educational services and financial services provided by registered banks, non-bank financial institutions and BSP-regulated Virtual Asset Service Providers.
- Nonresident DSPs must register via the BIR’s VAT on Digital Services (VDS) Portal within 60 days of the effective date of the regulations.
- Nonresident DSPs must include the transaction date, reference number, buyer’s TIN, a brief description and the total VAT-inclusive amount on sales documents.
- Philippine business buyers must withhold and remit the 12% VAT under the reverse charge mechanism within 10 days after the end of each month.
- Nonresident DSPs conducting B2C transactions must file quarterly VAT returns and pay tax due within 25 days after the quarter’s close.
- Noncompliance may result in severe penalties, including business suspension, blocking of digital services in the Philippines and legal actions under the BIR’s Run After Tax Evaders (RATE) Program.
Source: bdo.global
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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