- New VAT Legislation: In October 2024, the Philippine President signed Senate Bill 2528, imposing a 12% VAT on non-resident digital service providers (DSPs), effective June 2025.
- Compliance Structure: Non-resident DSPs are not required to appoint local tax representatives for VAT compliance but can hire local third-party service providers to assist with administrative tasks like record-keeping and tax filings.
- Phased Implementation: The VAT will be rolled out in phases, starting with regulatory development from November 2024 to January 2025, transitioning from February to May 2025, and officially launching on June 1, 2025.
- Taxable Services: The VAT applies to various digital services, including online search engines, cloud services, streaming media, and online advertising, with online marketplaces required to remit VAT for non-resident seller transactions under specific conditions.
- Revenue Expectations and Thresholds: The Department of Finance estimates the new VAT will generate approximately ₱102 billion (around $1.73 billion) from 2025 to 2029. A VAT registration threshold of ₱3 million (approximately $59,500) is established, and non-resident DSPs will not be able to claim input tax credits.
Source: fiscal-requirements.com
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.
