On Apr. 25, 2025, PHI Tax published amendments (dated Apr. 2) to section 14 of reg 003-2025 above, concerning transitory provisions re registration of non-resident DSPs.
Those DSPs required to register must do so within 120 days from effectivity of the regulations above, through the VDS portal or online registration and update system.
Hence, they must register by Jun. 1 and will become subject to VAT starting Jun. 2, 2025; PHI Tax may extend the deadlines for the transition period if deemed necessary.
On Oct. 3, PHI GVT amended rules re VAT on digital service providers.
PHI GVT amended Republic act no. 12023, the national internal revenue code of 1997.
Aimed at promoting fair competition because it equalizes the value-added tax (VAT) to be paid by both local and foreign companies doing business in the Philippines.
Follows PHI Tax Aug. 2024 issued rules regarding business registrations, see #223155.
Amendments Overview
Digital service providers, regardless of their residency, are subject to VAT on the digital service consumed in the Philippines, subject to provisions on withholding of VAT.
Defines digital services such as online search engine, online marketplace, cloud services, online media, advertising, online platform; defines digital service providers.
Specifies the liability of non-resident digital service providers to withhold or remit VAT.
Oct. 4, 2024 PHI Tax Comments
On Oct. 4, 2024, PHI Tax issued a media release regarding the amended act above.
The amended act ensures VAT is paid by both local and foreign digital service provides.
In Nov. 2024, PHI Tax proposed regulations for digital service providers, see #232889.
Nov. 2024 PHI Tax Press Release
On Nov. 12, 2024, PHI Tax published a press release highlighting the aim of the revised law, which is to ensure that VAT is levied on all forms of digital transactions.
Also covered key aspects of the law, including the obligation of digital service providers to register with PHI Tax and remit tax, and its plan to monitor implementation strictly.
PHI Tax is now able to suspend business operations of, and block access to services in the Philippines by, digital service providers until they are complying with obligations.
Non-resident digital service providers will be subject to VAT 120 days from the effective date of the law's implementing rules and regulations.
Jan. 2025 PHI Tax VAT Implementation
On Jan. 17, 2025, PHI Tax issued RR 003-2025, implementing VAT on digital services.
Guidelines prescribe policies as per the National internal revenue code amendments.
Imposes 12% VAT on gross sales of digital services consumed in the Philippines; digital service providers (DSPs) must register with PHI Tax via VAT on digital services portal within 60 days of regs' effectivity; non-resident DSPs not required to have local rep.
Resident DSPs file VAT returns per regular tax code procedures; B2B transactions require withholding and remitting 12% VAT within 10 days of the following month.
B2C transactions require quarterly filing within 25 days after quarter end, with monthly payment option; PHI Tax may conduct a verification of DSPs' declared gross sales.
Noncompliant DSPs face business suspension and closure orders via relevant laws.
These revenue regulations shall take effect 15 days after publication, so for instance, if duly published on Jan. 17, 2025, they would take effect on/from Feb. 1, 2025.
Apr. 2025 Transitory Provisions
On Apr. 25, 2025, PHI Tax published amendments (dated Apr. 2) to section 14 of reg 003-2025 above, concerning transitory provisions re registration of non-resident DSPs.
Those DSPs required to register must do so within 120 days from effectivity of the regulations above, through the VDS portal or online registration and update system.
Hence, they must register by Jun. 1 and will become subject to VAT starting Jun. 2, 2025; PHI Tax may extend the deadlines for the transition period if deemed necessary.
