- BIR issued RMC No. 59-2026 to clarify VAT rules for digital services under RA 12023, covering registration, reporting, and transaction structures effective June 2, 2026.
- Nonresident digital service providers may still need to register and file VAT returns even for VAT-exempt digital services; exempt sales must be reported separately.
- In cross-border B2B/cost-sharing setups, the party considered the NRDSP depends on the actual contracting/control arrangement; Philippine entities must withhold, file, and remit the 12% VAT under the reverse-charge rule.
- VAT applies only to the digital-services portion of a sale, including services used by both resident and nonresident consumers in the Philippines; pre-effective-date payments are taxed only for the remaining service period.
- Other clarifications: certain Philippine services to NRFCs can be zero-rated if BSP rules are met; e-marketplaces may still be treated as DSPs and must collect/remit VAT; tax treaty benefits do not automatically exempt digital services from VAT.
Source: kpmg.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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