In the Philippines, VAT on digital services is governed by the National Internal Revenue Code (NIRC), as well as specific guidelines issued by the Bureau of Internal Revenue (BIR). The Philippines has been tightening regulations for digital business in recent years, especially those offering services to local consumers.
What’s New?
The Philippines has expanded its tax framework: RA 12023 now imposes Value-Added Tax (12%) on digital services consumed within the country. Below is a breakdown of what this means for consumers, businesses, and foreign digital service providers.
What Qualifies as Digital Services?
Under the recent Revenue Regulations, digital services are defined as services delivered over the internet or electronic networks—typically highly automated and reliant on information technology. These include, but are not limited to:
- Online search engine;
- Online marketplace or e-marketplace;
- Cloud service;
- Online media and advertising;
- Online platform; or
- Digital goods.
Who are covered by this regulation?
Providers: Any persons such as individuals or juridical, resident or nonresident, who supply, or deliver digital services from anywhere, if those services are consumed by users in the Philippines. Exclude: Physical goods shipped from abroad.
Implementation: Key Guidelines and Rules
The Bureau of Internal Revenue (BIR) has issued several regulations to set out how this works in practice.
- Revenue Regulations (RR) No. 3-2025, RR No. 14-2025, and Revenue Memorandum Circular (RMC) No. 47-2025, which provide the implementing guidelines for the registration and compliance requirements of Nonresident Digital Service Providers (NRDSPs).
Effectivity date: Beginning June 2, 2025, all digital service activities—including other IT-enabled services—will be subject to 12% VAT.
Registration period: Under RR No. 14-2025, NRDSPs must register or update their registration with the BIR within one hundred twenty (120) days from the effectivity of the regulation, (replacing the original sixty (60) days provided under RR No. 3-2025)
Tools and compliance mechanism: The BIR has created a “VAT on Digital Services” (VDS) Portal for NRDSPs, intended to facilitate registration, filing, and remittance. However, as the VDS Portal is not yet fully operational, NRDSPs may temporarily register through the Online Registration and Update System (ORUS):(https://orus.bir.gov.ph/home).
The commissioner of Internal Revenue may further extend the deadlines on the transition period in these Regulations as may be deemed necessary.
Reference:
BIR Revenue Regulation No. 3-2025
BIR Revenue Regulation No. 14-2025
BIR Revenue Memorandum Circular No. 47-2025
