Philippines: Guidance on taxation of cross-border services
Guidance from the Bureau of Internal Revenue (BIR)
The Bureau of Internal Revenue (BIR) issued Revenue Memorandum Circular (RMC) No. 24-2026 to clarify the application of RMC Nos. 5-2024 and 38-2024 on the taxation of cross-border services.
A key clarification under RMC No. 24-2026 is that not all cross-border services are automatically subject to Philippine income tax. The mere classification of a transaction as a cross-border service does not alone trigger tax liability. Rather, the general rule remains—income from services is taxed where the services are performed. However, the RMC broadened that concept to consider where the service is completed or where the benefit is received.
The RMC also provides the following guidance on documentation:
- To meet the burden of showing that income paid to a nonresident is sourced outside the Philippines and not subject to local tax, taxpayers may present a range of documents, including service contracts, invoices, proof of payment, and certifications of the nonresident’s tax residency and non-registration in the Philippines.
- Sworn statements and other supporting records may also be required to substantiate the nature and location of the services performed.
- Certified photocopies of documents are allowed, subject to verification by the BIR.
Read an April 2026 report prepared by the KPMG member firm in the Philippines