- New VAT Regulations: Starting June 2025, nonresident digital service providers in the Philippines must register for VAT, charging 12% on B2C transactions, while B2B transactions will follow a reverse charge mechanism.
- Definition and Scope: Digital services covered under the new regulations include online advertising, cloud services, streaming, and digital content sales, while other services are exempt. Online marketplaces are considered suppliers responsible for VAT on B2C sales.
- Compliance Requirements: Providers must ensure compliance with registration, invoicing, and reporting standards to avoid penalties, including potential suspension of operations. Businesses are advised to prepare early for these changes to maintain market access and mitigate risks.
Source Fonoa
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Other sources
Philippines Issues VAT Guidelines for Cross-Border Digital Services
- The Philippines’ BIR issued guidance requiring nonresident digital service providers (NRDSPs) to register for VAT by June 1, 2025, through the new VDS Portal or interim ORUS system.
- VAT rules apply to teleconsultation platforms, covering online appointments and virtual consultations that provide real-time medical services, such as diagnosis, treatment, and support via video or audio calls.
- NRDSPs selling via e-marketplaces are not subject to VAT if payments go directly to their accounts; marketplace operators are not liable if they don’t control payment flows.
- For B2B services, Philippine customers must withhold and remit the 12% VAT; NRDSPs must still register and file returns, even if serving exclusively business clients.
Source: regfollower.com
