Philippines – New Registration Requirements for Non-Resident Providers of Digital Services 

Non-resident digital service providers, digital sellers, and online platform operators have been “patiently waiting” for official regulations or instructions by the Bureau of Internal Revenue (BIR) to clarify the registration procedure. The January RR No. 3-2025 (Revenue Regulation) defined that the registration procedure should be processed only through the VAT on Digital Services (VDS) portal. 

This portal should be established exclusively for simplified registration and reporting duties for non-resident digital service providers. It will, to a large extent, simplify these entities’ VAT compliance responsibilities. However, the VDS portal hasn’t been established, and the fixed registration deadlines have been surpassed. 

However, in recent weeks, the Philippines Bureau of Internal Revenue has published two important pieces of tax legislation for cross-border suppliers of digital services. We are addressing a Revenue Regulation issued on April 26 and a Revenue Memorandum Circular issued on May 9, 2025, which come into effect immediately.

These two pieces of legislation are important for stakeholders who are or will be part of the Philippine digital economy. 

Latest Updates and Timeline

Following the latest legal updates, the non-resident digital service providers (direct suppliers or digital platform operators) should register for VAT in the Philippines by June 1, 2025. Starting June 2, 2025, they are obliged to charge VAT on their cross-border digital services supplies to Philippine customers. 

Registration Requirements

However, with the last two tax acts issued earlier, BIR shed long-awaited transparency on the registration process, new deadlines, and new rules. If the VDS portal isn’t unavailable, economic operators who register for cross-border VAT on digital services should register via the Online Registration and Update System (ORUS). 

With the adoption of the new route for VAT registration for foreign providers of digital services, the concerned parties should act promptly and register for VAT in the Philippines before the deadline approaches. The mandate for VAT collection and reporting is less than two weeks away. 

Our advice is to act fast, register your business within the compulsory timeframe, and start being VAT compliant from day one, to eliminate the possibility of paying late registration fines, penalties, and interest. 

Who is responsible for VAT registration in the Philippines, and what are the reporting duties of taxable persons involved:

1. Non-resident digital service providers that provide digital services to end customers (B2C transactions) – these providers are obliged to register for VAT(when the threshold conditions are met), charge 12% VAT on their supplies, and submit quarterly VAT return – using prescribed form via VDS portal or ORUS portal, until VDS portal becomes operational; 
2. Non-resident providers of digital services providing both B2B and B2C digital services, these providers are obliged to register for VAT (when the threshold conditions are met), charge 12% VAT on their B2C supplies, and submit quarterly VAT return – using prescribed form via VDS portal or ORUS portal, until VDS portal becomes operational; 
3. Non-resident digital service providers that provide digital services to VAT-registered Philippine businesses (B2B) are obliged to register for VAT(when the threshold conditions are met). Nonetheless, they provide exclusively B2B digital services, and file a quarterly return using the prescribed form; 
4. For B2B transactions, the locally VAT-registered recipient will be obliged to withhold 12% VAT from the gross amount and file a prescribed withholding tax return. 

How to stay compliant 

• Review the turnover of your sales to customers in the Philippines;
• Determine what type of transactions your business will handle;
• Register when the threshold is reached;
• Submit VAT returns and make VAT payments on time;
• Follow the Invoicing and Recording requirements.

Please contact us if you have any questions concerning the VAT registration process in the Philippines and your VAT compliance responsibilities for your business operations. Our tax team would be happy to assist you.

Cross-border providers of digital services with customers in the Philippines should be aware of the latest legislative updates, which establish new registration requirements and associated responsibilities. In addition to strict registration deadlines and VAT charging, there are additional reporting requirements. 

Act promptly to eliminate any potential late registration penalty.