- New tax laws have been enacted to update the National Internal Revenue Code, including RA No. 12023, which imposes a 12% VAT on digital services in the Philippines.
- RA 12023 introduces Section 108-A, making both resident and non-resident digital service providers responsible for VAT on services in the Philippines.
- Previously, only resident digital service providers were subject to VAT; now, non-resident providers are also liable.
- The Bureau of Internal Revenue issued regulations and a memorandum to clarify the liabilities of non-resident digital service providers (NRDSPs).
- NRDSPs are defined as digital service providers without a physical presence in the Philippines.
- In B2B transactions, businesses must file and remit VAT under the reverse charge mechanism, while NRDSPs must report transactions.
- In B2C transactions, NRDSPs are directly liable for filing and paying VAT through the VAT on Digital Services Portal.
- E-marketplaces are liable for VAT if they control key aspects of supply or are involved in service delivery.
- NRDSPs must register with the BIR within 120 days of the regulations’ effectivity, either through the VDS Portal or the Online Registration and Update System.
Source: grantthornton.com.ph
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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