- Philippines implemented 12% VAT on cross-border provision of digital services
- Nonresident digital service providers without physical presence in the Philippines are subject to VAT
- VAT registration threshold is PHP 3 million in a 12-month period
- Republic Act 12023 will become effective 15 days after publication
- Department of Finance will issue implementing rules and regulations within 90 days
- Nonresident digital service providers will be subject to VAT after 120 days from the effectivity of the rules
- Democratic Republic of Congo, Morocco, Zambia, Senegal, Peru, and Ethiopia have also implemented digital service rules
- Domestic and nonresident suppliers are liable for assessing, collecting, and remitting 12% VAT on digital services
- Definition of digital services includes online search engines, online marketplaces, cloud services, online media and advertising, online platforms, or digital goods
- Nonresident digital service providers must register for VAT and remit taxes for digital services provided to non-VAT-registered consumers
- VAT-registered customers must apply the reverse charge mechanism for digital services purchased from nonresident providers
- Online marketplaces are liable to remit VAT on nonresident sellers’ transactions through their platforms
- Educational services and digital financial services are exempt from VAT
- Commissioner of Internal Revenue can suspend business operations of non-compliant digital service providers
Source: fonoa.com
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Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.
