- On October 2, 2024, the Philippine Congress passed Republic Act No. 12023, extending VAT obligations to foreign digital service providers, even without a physical presence in the Philippines.
- VAT applies if services are offered online, consumed in the Philippines, and sales meet or exceed the VAT threshold of 3 million pesos (approx. EUR 47,900) over the last 12 months.
- The VAT rate is 12%, with exemptions for educational and financial services. B2B transactions use a reverse charge scheme, while B2C transactions require the provider to remit VAT.
- The law also applies to non-resident online marketplaces that control key supply aspects. Providers must register for VAT and issue invoices, with regulations to be announced 90 days post-effectiveness.
- The law takes effect 15 days after publication, with compliance required 120 days after regulations are announced. Non-compliance may lead to suspension of operations in the Philippines.
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