- The BIR issued RMC No. 059-2026 to clarify VAT rules on digital services under RR No. 003-2025.
- Even if a nonresident digital service provider’s services are VAT-exempt, it must still register with the BIR and file VAT returns, reporting exempt sales accordingly.
- In cross-border cost-sharing setups, the Philippine subsidiary that ultimately uses the digital services is still subject to VAT and must withhold and remit the 12% VAT as a B2B transaction.
- The foreign digital service provider generally does not need to register unless it also serves other Philippine customers; a foreign affiliate may need to register if it controls key supply terms or delivery/order processes.
- The BIR also confirmed that for such B2B digital service transactions, the Philippine subsidiary is responsible for VAT filing, payment, and remittance.
Source: taxathand.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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