International VAT Guides – Philippines
VAT rates in Philippines
How much is VAT in Philippines?
The Philippines VAT regime for non-resident and resident digital service providers has been updated several times in recent years. The introduction of a specifically designed VAT mechanism for providers of digital services and products encountered more than a few setbacks.
Finally, after a few tumultuous years, the last steps were taken in May 2025, and the last missing pieces of Revenue Regulations and Revenue Circulars were adopted. With these pieces of tax legislation and previously adopted ones, the foundational VAT framework for non-resident providers of digital services has been prepared.
The last Revenue Regulations and Revenue Memorandum Circular, which have been adopted and enacted by the Bureau of Internal Revenue, defined that from June 1, 2025, providers of digital services should register via VAT on Digital Services(VDS) portal, and if that one isn’t available through the ORUS portal.
The obligation to charge, collect, and remit VAT on digital goods and services should take effect from June 2, 2025. The providers of digital services are liable for VAT from that date.
Non-resident providers of digital services should register exclusively through the VDS portal; if that portal isn’t available, they may register through the ORUS portal. The simplified registration and reporting system is designed explicitly for non-resident providers of digital services. With the term’ non-resident providers of digital services’, the respective legislator meant both direct suppliers and digital platform operators.
B2C transactional reporting is done through a simplified pay-only method.
The Philippines VAT regime is mainly based on the:
- The Internal Revenue Tax Code;
- Revenue Regulations;
- Republic Act that amended the Tax Code (introduced the concept of VAT on digital services);
- Revenue Memorandum Circulars;
- Different VAT Guides.
| Philippines VAT Rate | Rate Type | Coverage and imposition |
| 12% | Standard Rate | The general VAT rate applies to all supplies of goods and services that aren’t zero-rated or exempt. |
| 0% | Zero-rate | Exports. |
| Tax-exempt | Tax-exempt | Medical, dental, hospital, and veterinary services except those rendered by professionals. |
VAT threshold in Philippines
The simplified registration regime is defined in the VAT Philippines Revenue Regulations and accompanying Circulars adopted by the Bureau of Internal Revenue(BIR). The last Revenue Memorandum Circular adopted by the BIR sheds light on the reporting duties for different types of transactions performed by non-resident digital service providers, which weren’t explored in detail before.
The Revenue Regulation that came into force in April 2025 introduced new dates and procedures for VAT registration for non-resident digital service providers.
The VAT threshold in Philippines for overseas providers of digital services/products is defined under VAT rules for domestic providers of digital services, following section 108 of the Internal Revenue Tax Code.
VAT registration threshold for resident businesses: PHP 3 million.
VAT registration threshold for non-resident businesses: PHP 3 million.
VAT registration threshold for foreign providers of digital services: PHP 3 million.
VAT Taxable Activities in Philippines
Types of taxable activities that trigger mandatory VAT registration:
- Supply of goods and services for consideration;
- Exports;
- Imports of goods and services;
- Overseas sales of low-value goods to customers in the Philippines;
- Provision of digital services to customers in the Philippines.
Tax Representative in Philippines
Non-resident digital services providers are not required to engage with the local third-party service provider for VAT registration and filing purposes.
Tax registration
Standard Registration
Domestic or foreign taxable persons that exceed the registration threshold must register for VAT in the Philippines, following the standard registration procedure. To address different types of registration procedures, depending on the applicant’s place of business or the type of business activity, the BIR has created various templates and modalities through which the respective party can register.
Simplified tax registration
For non-resident providers of digital services (NRPDS), the Bureau of Internal Revenue has prepared a specifically designated procedure and portal. The VAT on Digital Services portal has been developed specifically for NRPDS to reduce administrative burden, costs, and “excuses” for not being registered, considering the technical difficulties.
The VDS portal, when available, will be the sole registration route for NRDSPs. While the portal is being developed, the NRDSP should register using the ORUS webpage.
To accompany the simplified registration procedure, BIR has also prepared the simplified reporting for NRDSPs. The simplified reporting is based on the pay-only system. The NRDSP will be able to only report and remit (if any)VAT via a simplified reporting scheme. They will not be able to recover input tax credits.
VAT on Electronically Supplied Services in Philippines
Digital Services
The NRDSP will be obliged to report both B2B and B2C transactions. For B2C transactions, they will be liable for charging, collecting, and remitting the VAT via the prescribed form. However, for B2B transactions, the obligation is based solely on reporting the gross sales value, without requiring VAT collection. The VAT will be withheld by locally registered business persons and remitted via a withholding tax return.
How much is VAT in Philippines for Electronically Supplied Services?
The VAT rate Philippines for supplies of most remote services (digital and non-digital) is 12%.
Taxable Digital Services in Philippines
The following types of digital services trigger mandatory VAT registration of non-resident providers:
- Audio and video streaming services;
- SaaS services;
- Intermediation between third parties offering goods or services and those seeking them;
- Travel arranging services.
Marketplace and Digital Platform Operators Rules
The NRDSP e-marketplace or digital platform operator should charge, collect, and remit VAT for all underlying supplies of digital services by non-resident digital services providers if it is liable for VAT under the Philippines VAT rules.
Invoicing Rules
A VAT-registered non-resident supplier of digital services is obliged to issue a commercial invoice or receipt with mandatory content requirements. For B2C transactions, the following represents the minimum content requirements:
General information:
- Date of invoice issuance;
- Transaction Reference Number.
Seller information:
- Company name;
- Full address (head office);
- Billing address if different from company address;
- VAT number.
Customer information:
- Name;
- Full address;
- VAT number (if applicable).
Fiscal Information:
- Tax amount for each type of goods or services supplied;
- Net value per tax rate;
- Distinct line of gross value per tax rate or tax-exempt supply;
- Total tax amount;
- Invoice Total tax exclusive;
- The rate of any discount;
- Total invoice amount.
Foreign Currency Invoice in Philippines
Issuing an invoice in a foreign currency is generally permitted. However, VAT declarations should be submitted exclusively in the local currency.
VAT Return in Philippines
Standard Return
Local businesses and foreign businesses with a permanent establishment in the country should follow the general reporting and accounting rules and are mandated to complete and submit the prescribed return template.
Simplified return
Non-resident providers of digital services are required to submit a simplified return, which will be available through the VDS portal.
VAT Simplified Return
| VAT Return Name | BIR Form No. 2550-DS |
| Filling frequency | Quarterly |
| Online Filling | Mandatory |
| Annual Return | No |
| Filing deadline | Within 25 days from the end of the taxable period |
| Payment deadline | Same as for the submission of the quarterly return |
| Payment currency | PHP |
| Language | English |
| Local VAT acronym | VAT |
Penalties for late reporting and omitted declarations
Late VAT return filing, payment, and registration are situations in which taxable persons are most likely to experience the unwanted expense of paying a fine, penalty, and/or interest for failing to comply within the prescribed timeframe.
Fines and penalties according to the VAT Philippines Act:
For late filing with tax due to be paid, in addition to the tax due, the following penalties will be imposed:
- Surcharge penalty in the value of 25% of the amount owing; and interest shall be assessed and collected on any unpaid amount of tax, interest at the rate of twenty percent (20%) per annum.
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