Special InTAX: May 2025 Issue 1 | Volume 1

Bureau of Internal Revenue

The Bureau of Internal Revenue (BIR) issued Revenue Memorandum Circular (RMC) No. 47-2025 on 8 May 2025, to clarify the provisions of Revenue Regulations (RR) No. 3-2025, which implement Republic Act (RA) No. 12023, and to address certain issues pertaining to the implementation of the Value-Added Tax (VAT) on digital services.

The salient points of the RMC are as follows:

• The requirement to register or update the registration with the BIR under Section 5 of RR No. 3-2025 applies to Non-Resident Digital Service Providers (NRDSPs), regardless of the nature of their transactions, whether Business-to-Business (B2B), Business-to-Consumer (B2C), or both.
• The NRDSPs with purely B2B transactions are still required to file tax returns with the BIR to report their B2B transactions.
• The NRDSPs shall register through the VAT on Digital Services (VDS) Portal once available within 120 days from the effectivity of RR No. 3-2025, or on or before June 1, 2025. Prior to the VDS Portal roll-out, the NRDSPs or their appointed resident third-party service providers shall register through the Online Registration and Update System (ORUS) in the BIR website (https://www.bir.gov.ph/eServices).
• Q&A No. 5 provides for the information that shall be provided by the NRDSP during registration.
• Any official registration document issued by an authorized government regulatory body in the country where NRDSP was incorporated or organized that includes the name of the NRDSP shall be sufficient for the registration.
• NRDSPs do not need a local representative in the Philippines to register with the BIR. However, for NRDSPs with local representative, they may manually register with BIR RDO No. 39 – South Quezon City.
• NRDSPs may appoint a resident third-party service provider (an individual or entity, such as a law firm or accounting firm) for purposes of registration, filing of tax return and payment of taxes, receiving notices, record keeping, and other reporting obligation. For VAT purposes, the appointment of a resident third-party service provider shall not classify the NRDSP as a resident foreign corporation doing business in the Philippines.
• A BIR Certificate of Registration (COR)/BIR Form No. 2303 containing the assigned TIN and other registration details shall be issued to the NRDSP, which shall be used in the filing of VAT returns, and remittance of VAT, if any, to the BIR. They will be registered and liable for payment of the 12% VAT on their gross sales from the supply and delivery of digital services consumed or used in the Philippines. The NRDSP shall be immediately subject for VAT after 120 days from the effectivity of the RR No. 3-2025, or starting June 2, 2025.
• An NRDSP which fails to register for VAT shall be imposed with applicable penalties under Section 13 of RR No. 3-2025, and suspension of its business operations under Section 12 of the same RR, if warranted.
• In B2B transactions where the NRDSPs provide digital services to Philippine consumer/buyer engaged in business, including the Government or any of its political subdivisions, instrumentalities or agencies, including GOCCs, the Philippine consumer/buyer shall be liable for: (i) electronically filing the required remittance return; and (ii) withholding and remitting the 12% VAT due on its purchase.
• Q&A No. 15 provides for the mechanisms to be observed for a DSP acting as an online marketplace or e-marketplace on the transactions of resident and non-resident sellers or suppliers that go through its platform. Provided that, such DSP controls the key aspects of the supply and performs any of the following: (a) it sets directly or indirectly any of the terms and conditions under which the supply of digital services is made; or (b) it is involved in the ordering or delivery of digital services whether directly or indirectly.
• Q&A No. 16 provides for the invoicing requirements for NRDSPs.
• For B2B supply of digital services made by a VAT-registered NRDSP, the obligation for assessing and remitting the 12% VAT shall be the responsibility of the Philippine business consumer/buyer. The VAT amount must be clearly stated on the invoice. However, if the NRDSP is unable to include the VAT amount on the invoice, it must include a footnote/annotation on the invoice indicating that the Philippine business consumer/buyer is responsible for accounting and remitting the 12% VAT due on the transaction to the BIR.
• For B2B and B2C transactions, the NRDSP shall use BIR Form No. 2550-DS in filing the VAT return and/or payment/remittance of the VAT due thereon, which shall be available and generated in the VDS portal. In B2B transactions, the business consumer/buyer, whether VAT or non-VAT registered, shall use BIR Form No. 1600-VT in filing and remittance of the withheld VAT from the NRDSP.
• Pursuant to Section 7(B) of RR No. 3-2025, VAT-registered NRDSPs shall not be allowed to claim creditable input tax.
• The NRDSP cannot file for refund of the erroneously paid VAT. However, the NRDSP may amend the previously filed BIR Form No. 2550-DS to reflect the overpayment which may be carried-over to the succeeding quarter/s.
• The e-marketplace shall not be liable to pay VAT if the payment for digital service is made directly to the account of the NRDSP. However, the service fee charged by the marketplace to the consumer/buyer located in the Philippines, if any, shall be subject to VAT.
• The separate service fee charged by the online marketplace for the use or availment of the digital service shall remain subject to VAT when said service fee has been charged to a consumer/buyer located in the Philippines.
• Q&A No. 23 provides that only digital services as defined under RA No. 12023 shall be subject to VAT. Q&A No. 24 provides an example of services performed by the company through an online teleconsultation platform which were considered within the definition of “digital services” subject to VAT under RR No. 3-2025.
• For the sale of online subscription-based services to educational institutions, the latter shall only present the accreditation/recognition from DepEd, CHED and TESDA, as the case may be, in order to avail of the VAT exemption.
• NRDSP are eligible for VAT exemption if the digital services rendered are directly attributable to the: (1) registered business activity/project of the Investment Promotion Agency-registered entity, classified as registered export enterprise, high-value domestic market enterprise or domestic market enterprise under transitory provision of RA No. 12066; or (2) export activity of the EOE.
• To properly support any claim for input VAT on purchases of digital services from NRDSPs, VAT-registered Philippine business customers/buyers shall use the filed withholding VAT return/BIR Form No. 1600-VT as proof.
• If the Philippine buyer already paid for the full-year contract in advance without including the 12% VAT, the NRDSP is still liable for the VAT on the portion of services provided from 2 June 2025 onwards.
• Q&A No. 30 provides that under RA No. 12023, the 12% VAT is applicable to digital services, regardless of the provider’s physical presence, as long as it is consumed in the Philippines. Therefore, if the shared cost is for digital services consumed by the Philippines subsidiary, it would be subject to VAT as a B2B transaction, i.e., 12% withholding VAT.

The RMC is effective immediately.

Here is the link to the full text of the issuance: RMC No. 47-2025