Mooted July 2025 launch for Act to impose 12% VAT on nonresident digital service B2C providers & platforms
The Philippines President, Ferdinand Marcos Jr., signed into law Senate Bill 2528 a measure imposing the 12% value-added tax (VAT) on nonresident digital service providers. In August, the House of Representatives had approved the Bill.
1st July 2025 earliest practice start of phased implementation
Collections will commence in 2025 – more details to follow. The introduction will be as follows:
- Nov 24 to Jan 25 to develop and publish the implementing rules and regulations from the Bureau of Internal Revenue (BIR);
- Feb to May 2025 transition for BIR to implant the rules and regulations; then
- 1st July 2025 launch.
Foreign providers are liable for assessing, collecting, and remitting the value added tax. Online marketplaces or e-market platforms are also liable to remit the value added tax on the transactions of non resident sellers that go through their platforms under certain conditions. They will be required to appoint a resident fiscal representative for reporting VAT.
Taxable services include: online search engine; online market place or e-market place; cloud services; online streaming and download media; and advertising.
A Philippines 1% Withholding Tax on platforms has recently been implemented.
The Department of Finance believes it will raise P102 billion in revenue from 2025 to 2029 in taxes for the government. It will level the playing field for local providers who are already subject to the existing 12% standard VAT rate.
VAT is now levied on online advertisement services, digital services and the supply of other electronic services. B2B transactions are not be liable to VAT; instead the reverse charge mechanism should be applied.
The Act includes a VAT annual sales registration threshold of PHP 3million (approx. €51,400 or $59,500). The Act mandates the Bureau of Internal Revenue (BIR) to establish a simplified automated registration system. But nonresident digital service providers will not be allowed to claim creditable input tax.
VAT Calc’s global VAT and GST on digital services tracker to see which other countries have introduced indirect taxes on electronic services to consumers.
What digital services liable to Philippines VAT?
The Act defines digital services as “any service delivered or subscribed over the internet or other electronic network which cannot be obtained without the use of information technology.” The law goes further:
- The supply of advertising space and other services for the purpose of online advertisement
- The supply of digital services in exchange of a regular subscription fee
- The supply of electronic or online services that can be delivered through an IT infrastructure such as the internet
This would likely include income from
- Software licensing
- Database services
- Online telecoms services
- E-learning (except from public educators as exempted)
- Streaming and download media
- Mobile apps
- E-books and newspapers
- SaaS and cloud-based software
- Hosting and other internet services
- Online advertising
- Membership to dating memberships
- Online gaming
- Search engine services
Asia Pacific VAT on digital services
| Comments (click for details) | Rate | Date | Threshold | Comments |
| Australia | 10% | Jul 2017 | AUD $75,000 | |
| Azerbaijan | 12% | Jan 2017 | – | |
| Armenia | 20% | Jan 2022 | AMD 115million | |
| Bangladesh | 5% - 15% | Jul 2019 | – | B2B and B2C |
| Bhutan | 7% | Jul 2021 | Nu 5million | |
| Cambodia | 10% | Mar 2022 | KHR 250m | |
| China | 6%-13% | N/a | Nil | Withholding VAT; B2B and B2C |
| Cook Island | 15% | 2019 | NZ$ 40,000 | |
| Fiji | 9% | TBC | FJD 300,000 | |
| India | 18% | Jul 2017 | - | |
| Indonesia | 11% | Aug 2020 | IDR600m or 12k customers | |
| Japan | 10% | Oct 2015 | JPY 10 million | |
| Kazakhstan | 12% | Jan 2022 | Nil | |
| Kiribati | 12.5% | 2017 | AU$ 100,000 | |
| Kyrgyzstan | 12% | Jan 2022 | Nil | |
| Laos | 10% | Feb 2022 | LAK 400m | |
| Malaysia | 8% | Jan 2020 | RM500,000 | |
| Nepal | 13% | Jul 2022 | Rupees 2m | Also 2% DST |
| New Caledonia | 11% | 2020 | XPF 7.5 million | |
| New Zealand | 15% | Oct 2016 | NZD 60,000 | |
| Pakistan | 2% | Sep 2021 | Nil | Marketplace Withholding VAT |
| Palau | 10% | Jan 2023 | $300,000 | |
| Philippines | 12% | May 2025 | P 3million | |
| Singapore | 9% | Jan 2020 | S$ 100,000 | |
| South Korea | 10% | Jul 2015 | Nil | |
| Sri Lanka | 18% | 2025? | LKR 60m | Proposals only |
| Taiwan | 5% | May 2017 | NTD 480,000 | |
| Tajikistan | 14% | Jan 2021 | ||
| Thailand | 7% | Sep 2021 | 1.8m Baht | |
| Uzbekistan | 12% | Jan 2020 | Nil | |
| Vietnam | 10% | Dec 2020 | – |
