PHILIPPINES: Digital Transaction Tax to Come Into Effect in 180 Days

Moves to impose VAT of up to 12% on all of the country’s digital transactions have inched towards implementation following the approval of facilitatory legislation by the lower house of Congress. There will now be a 180-day transition period before the tariff on Digital Service Providers (DSPs) comes into effect, with the long lead-in giving the Bureau of Internal Revenue sufficient time to set up the required implementation systems.  

Once fully implemented, non-resident DSPs operating online platforms will be obliged to assess, collect and pay VAT on any relevant transactions conducted via their platform. In the case of overseas-based DSPs with gross annual sales in excess of PHP3 million (US$59,668), VAT will be payable at the 12% level. Registered non-resident DSPs supplying services to the government, however, will only be liable for VAT at a level of 5%. 

Full details of the new arrangements can be found in House Bill 7425, which acts to amend Section 105 of the National Internal Revenue Code (NIRC).​​​​​​​