Philippines Imposes 12% VAT on Foreign Digital Service Providers

Effective June 1, 2025, Republic Act No. 12023 amends the Philippine Tax Code so that nonresident digital service providers (DSP) will be liable for 12% VAT on digital services consumed in the Philippines. The law defines digital services broadly and may include any service that is supplied over the internet or other electronic network including online search engines, online marketplaces or e-marketplaces, cloud services, online media and advertising, online platforms, and digital goods with the use of information technology and where the supply of the service is essentially automated. A copy of the implementation provisions from the Philippine Bureau of Internal Revenue can be found here.