Manila: The Bureau of Internal Revenue (BIR) clarified on Thursday that the value-added tax (VAT) on resident and non-resident digital service providers is not a new tax but ensures fairness in the taxation of digital services.
According to Philippines News Agency, Republic Act No. 12023, signed into law by President Ferdinand R. Marcos Jr. on Wednesday, extends the 12-percent VAT to foreign digital service providers, aligning them with local businesses that are already subject to the same tax. This covers online services such as digital advertisements, subscription-based services, and other electronic services that can be delivered via the internet.
Lumagui emphasized that the law levels the playing field between local businesses and foreign digital service providers, ensuring fair competition in the market. He noted that the new law ensures both local and foreign companies, as long as they operate in the Philippines, are taxed equally.
The BIR estimates that the law will generate PHP105 billion in revenue over the next five years.