Office of the President
On 21 May 2026, Memorandum Order (MO) No. 47 approving the 2026 Strategic Investment Priority Plan (SIPP) was signed into law by the President.
The salient points are as follows:
- The 2026 SIPP adopted FIRB Resolution No. 015-2025 dated 15 December 2025
- It is aligned with AmBisyon Natin 2040, PAGTANAW 2050, the Trabaho Para sa Bayan Plan and the Philippine Development Plan 2023-2028
- Investments are prioritized based on the national industrial strategy, with activities classified into three tiers:
Tier I shall include activities that:
(1) have high potential for job creation
(2) address market failures in basic goods/services
(3) generate value creation through innovation, upgrading, or moving up the value chain
(4) provide essential support for sectors that are critical to industrial development
(5) are emerging with a potential competitive advantage
Tier II includes activities that produce supplies, parts, and components and intermediate services that are not locally produced but are critical to industrial development and import-substituting activities, including crude oil refining.
Tier III includes activities that:
(1) involve research and development resulting in demonstrably significant value-added, higher productivity, improved efficiency, breakthroughs in science and health, and high-paying jobs
(2) generate new knowledge and intellectual property registered and /or licensed in the Philippines
(3) commercialize patents, industrial designs, copyrights and utility models owned or co-owned by a Registered Business Enterprise (RBE)
(4) involve highly technical manufacturing
(5) contribute to structural transformation of the economy and require substantial catch-up efforts, including but not limited to cyber-security, artificial intelligence, and data center facilities
- Export activities are under Tier I unless they qualify under higher tiers
- Activities under special laws are under Tier I unless complying with Tier II or Tier III qualification requirements (except for projects under RA No. 9513 and RA No. 12024)
- Area/region-Specific priorities are under Tier I unless complying with Tier II or Tier III qualification requirements
- The 2026 SIPP shall take effect fifteen (15) days after its publication in a newspaper of general circulation or in the Official Gazette.
(R.G. Manabat & Co. note: 2026 SIPP was uploaded to the Official Gazette on 02 June 2026. Effectivity date is 15 days thereafter or on 17 June 2026).
Bureau of Internal Revenue
The Bureau of Internal Revenue (BIR) issued Revenue Memorandum Circular (RMC) No. 59-2026, dated 02 June 2026, which further clarifies the provisions of Revenue Regulations (RR) No. 3-2025 implementing Republic Act (RA) No. 12023, titled "An Act Amending Sections 105, 108, 109, 110, 113, 114, 115, 128, 236 and 288 and Adding New Sections 108-A and 108-B of the National Internal Revenue Code of 1997, as Amended," imposing the Value-Added Tax (VAT) on Digital Services.
Below are the salient points of the Circular:
- If a Nonresident Digital Service Provider (NRDSP) supplies digital services to Philippine consumers that qualify for VAT-exempt, the NRDSP is still required to register with the BIR and file VAT returns. (Q&A No. 1).
- VAT-exempt digital services must be reported as VAT-exempt sales in the VAT return. In a cross-border cost-sharing arrangement involving:
(i) a foreign digital service provider;
(ii) a foreign affiliate that contracts for and/or pays for such digital services; and
(iii) a Philippine subsidiary that ultimately consumes the digital service
The foreign digital service provider is generally considered the NRDSP. However, if it has no direct transaction with the Philippine subsidiary and contracts only with the foreign affiliate, it is not required to register with the BIR, unless it also supplies VAT-able digital services to other Philippine consumers.
In such cases, the foreign affiliate may be treated as the NRDSP and must register with the BIR if it controls key aspects of the supply, such as:
(i) setting, directly or indirectly, the terms and conditions (i.e., price, payment terms, delivery conditions); or
(ii) being directly or indirectly involved in the ordering or delivery of digital services, that is, having influence over the conditions of delivery, transmission of approval to the supplier, and provision of order fulfillment services. (Q&A No. 2).
- Under the reverse charge mechanism, the Philippine entity in a Business-to-Business (B2B) transaction is responsible for filing the VAT return and withholding and remitting the twelve percent (12%) VAT on the cost of the digital service. (Q&A No. 2).
- NRDSPs are liable for the 12% VAT only on the portion of sales that qualifies as digital services, as defined in RR No. 3-2025. (Q&A No. 3).
- In B2B transactions, the Philippine entity remits the withheld VAT using BIR Form No. 1600-VT within ten (10) days following the end of the month in which the withholding was made. (Q&A No. 3).
- For payments covering periods prior to the effectivity of VAT on Digital Service Provider (2 June 2026), the 12% VAT applies only to the remaining portion of the service period. (Q&A No. 4).
- VAT applies to digital services supplied to a consumer located in the Philippines, regardless of whether the service provider is a resident or nonresident. (Q&A No. 5).
- Sale of service by a Philippine entity to a Nonresident Foreign Corporation (NRFC) is subject to zero-rated (0%) VAT, provided payment is made in acceptable foreign currency and accounted for in accordance with the rules and regulations of the Bangko Sentral ng Pilipinas (BSP). (Q&A No. 5).
- An NRFC engaged solely in facilitating between parties to a digital transaction and not operating as an e-commerce platform is subject to 12% VAT on service fees charged to Philippine clients for the use of its services. (Q&A No. 6).
- An e-marketplace may still be considered a digital service provider (DSP) for VAT compliance purposes, even if it does not directly receive payments for the digital services sold through its platform, provided it collects the VAT in advance. In such cases, it must file BIR Form No. 2550-DS and remit the VAT on covered B2C transactions. (Q&A No. 7).
- Entitlement to treaty benefits under a Double Taxation Agreement (DTA) does not automatically result in VAT exemption or zero rating. The VAT treatment of digital services is determined based on the National Internal Revenue Code, as amended. (Q&A No. 8).
The RMC No. 59-2026 is effective immediately upon issuance.
Here is the link to the full text of the issuances: MO No. 47 and RMC No. 59-2026.