Philippines: New law imposes VAT on cross-border provision of digital services
The law imposes a 12% VAT on digital services consumed in the Philippines.
A bill (Republic Act No. 12023) imposing value added tax (VAT) on the cross-border provision of digital services was signed into law on October 2, 2024.
The law imposes a 12% VAT on digital services consumed in the Philippines. “Digital services” refer to any service provided over the internet or other electronic networks using information technology when the transaction is essentially automated. Nonresident providers of these services are required to register if their gross sales exceed PHP 3 million and to charge and collect VAT for their services made to final consumers (B2C sales). Read TaxNewsFlash
The law was published on October 3, 2024, and is effective 15 days after publication. However, nonresident providers of digital services will only be subject to VAT after 120 days from the effectivity of the Implementing Rules and Regulations (IRR), which need to be issued within 90 days from the law’s effectivity.
Read an October 2024 report prepared by the KPMG member firm in the Philippines
For more information, contact a KPMG tax professional:
Philippe Stephanny | philippestephanny@kpmg.com
Chinedu Nwachukwu | chinedunwachukwu@kpmg.com
Julius Patrick Acosta | jcacosta@kpmg.com