The Bureau of Internal Revenue (BIR) shared a Note last week indicating that, based on its latest forecasts, it expects to collect approximately USD 360 million in VAT under the Digital Services Act, which took effect in August, 2025, after several postponements.
The BIR emphasizes the need to develop infrastructure to enable tax authorities to collect VAT from non-resident digital service providers. The tax authorities are continuously monitoring tax collection and the payment of outstanding taxes by non-resident digital service providers.
WIth the introduction of the simplified registration and reporting system for digital service providers, there is no longer any sort of “understandable” reasoning by tax authorities for lacking the VAT registration, or not-fulfilling the VAT compliance requirements by non-resident providers of digital services.
Other Side: Petition for Abolishment of the VAT on Digital Services Act
House Assistant Leader Mrs. Elago has filed a bill seeking to repeal the VAT on Digital Services. Submitted bill to repeal the Republic Act No. 12023, which introduced the VAT on digital services, on the grounds that it is a regressive tax, taxing SME’s, freelancers, online sellers, and domestic users. Does this bill stand a chance in Parliament, given its impact on the state budget?
It remains to be seen.
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