- VAT is set to be applied to digital services in the Philippines, affecting subscription fees and other online services
- The Bureau of Internal Revenue held a public consultation on November 12 to discuss the rules for implementing VAT on digital services
- The final rules are expected by January, with non-resident digital service providers starting to pay VAT 120 days later
- Digital services include any service supplied over the internet that is automated and uses information technology
- The definition covers a wide range of virtual services, potentially subjecting them to VAT
- Increased costs for consumers and more tax compliance for businesses are likely outcomes
- VAT applicability is determined by the place of consumption, specifically if the consumer is in the Philippines
- Questions remain about VAT when the payer and user are in different countries
- The law mandates VAT registration for non-resident digital service providers with sales over P3 million, but the draft rules may require all to register regardless of sales volume
Source: pwc.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.
