With less than a month to go before the full implementation of Republic Act 12023, or the Value-Added Tax (VAT) on Digital Services Law, foreign digital companies will soon be required to collect and remit value-added tax on services provided to Filipino consumers—even without a physical presence in the country.
In this article, BitPinas outlines which services will be subject to tax, and which will not under the new Digital Services Law.
What are Digital Services Under R.A. 12023?
Under the Philippines’ new rules, digital services refers to any service delivered via the internet or other electronic networks using information technology, where the process is largely automated and requires minimal human intervention.
Specifically, digital services include offerings such as online search engines, online marketplaces or e-marketplaces, and cloud services.
The definition also covers online media and advertising, online platforms, and the sale or provision of digital goods.
R.A .12023: Value-Added Tax on Digital Services Law
On October 2, 2024, President Ferdinand Marcos Jr. signed the Value-Added Tax on Digital Services Law, allowing the government to collect VAT from foreign and local digital service providers (DSPs), such as Netflix, Spotify, Amazon, and Lazada.
The law gave the Bureau of Internal Revenue (BIR) authority to collect VAT on digital goods and services, including media, music, video-on-demand, and ads. It also allowed the bureau to suspend or block noncompliant platforms.
On January 16, 2025, the BIR released Revenue Regulations No. 003-2025, outlining the implementation of a 12% VAT on foreign DSPs offering services to consumers and businesses in the Philippines.
The registration portal for DSPs opened on February 1, 2025, with the deadline for registration set for April 2, 2025. Starting June 1, 2025, VAT obligations will take effect, and all eligible nonresident DSPs must be VAT registered with the BIR’s portal.
Services and Platforms Subject to Tax
The regulation applies to all individuals or entities, resident or nonresident, engaged in the sale, supply, or delivery of digital services consumed in the Philippines.
It covers both business-to-business and business-to-consumer transactions. However, it excludes the sale of physical goods imported into the Philippines, as these are subject to customs duties and taxes under other laws.
Streaming Platforms
Websites or apps that let users watch movies or TV shows or listen to music without downloading the content.
Video Platforms
- Disney
- YouTube Premium
- Viu
- Amazon Prime
- HBO Max
- iQIYI
- CuriosityStream
- DAZN
- Crunchyroll
- MUBI
- Bein
Audio Platforms
- Spotify
- Apple Music
- YouTube Music
- Deezer
Online Marketplaces
Digital platforms that connect buyers and sellers, offering both digital and physical products.
- Lazada
- Shopee
- Amazon
- eBay
- Etsy
- Temu
Cloud Computing andStorage Services
Online services that provide computing power, software access, or data storage over the internet.
SaaS (Software as a Service)
- Microsoft 365
- Adobe Creative Cloud
- Canva Pro
- Zoom
- Notion
Infrastructure/Storage
- Google Cloud
- Amazon Web Services (AWS)
- Dropbox
- iCloud
- Box
Digital Advertising Services
Online tools or platforms used by businesses to promote products or services through ads on websites, apps, or search engines.
- TikTok
- X
- YouTube
Online Gaming and In-App Purchases
Digital services related to gaming, including virtual currencies and assets.
- Steam
- PlayStation Store
- Xbox Live
- Garena
- Mobile Legends (In-App)
- Genshin Impact
- Roblox (Robux Purchases)
Online Learning Platforms
Digital education services with paid access.
- Coursera
- Udemy
- Skillshare
- MasterClass
- Khan Academy (Paid Certifications)
- Edmodo
Software and App Purchases
Buying or downloading programs and mobile apps for devices like computers, phones, or tablets.
- Microsoft Office
- Adobe Creative Cloud
- Apple App Store
- Google Play Store
- Zoom
Digital Goods and Downloadable Content
Digital goods, such as e-books, art, and stock files, that are sold online through e-commerce sites, marketplaces, or digital platforms, often via paid access or downloads.
- Kindle Store
- Scribd
- Patreon
- Envato Market (Templates, Stock Media)
- Adobe Stock
- Gumroad
- ThemeForest
Subscription-Based Content Platforms
These platforms offer online services where users pay a recurring monthly or annual fee to access a wide range of digital content, such as news, tools, or niche interest material, on a subscription basis.
- New York Times
- Bloomberg
- Substack (Paid Newsletters)
- Medium Membership
- The Economist
Digital Intermediaries (Commission-Based Platforms)
Services that connect buyers and sellers, charging fees or commissions.
- Airbnb
- Grab (Booking Interface)
- Uber Eats / Foodpanda (Platform Fee)
- Fiverr / Upwork / Freelancer.com (Service Fee)
Monetized Social Media and Influencer Services
Platforms where content creators earn revenue are subject to VAT when applicable.
- TikTok (TikTok LIVE Gifts)
- YouTube Partner Program
- Twitch Subscriptions
- OnlyFans
- Facebook Stars
Ride-Hailing Apps
Applications that facilitate transportation services via digital platforms and generate income through commissions, platform fees, or service charges.
- Grab
- JoyRide
- Angkas
- inDrive
- Lalamove (If Offering Logistics via App)
Exemptions
Meanwhile, also under BIR’s Revenue Regulations No. 003-2025, certain digital services and transactions are exempted from the 12% VAT even if they are delivered digitally. These exemptions are based on existing VAT laws in the Philippines and are outlined under Section 109 of the Tax Code.
Educational Services
Online courses, seminars, and training sessions offered by private institutions accredited by the:
- Department of Education (DepEd)
- Commission on Higher Education (CHEd)
- Technical Education and Skills Development Authority (TESDA).
These also include services provided by government educational institutions, including online learning.
Sale of Online Subscription-Based Services
Subscription services for educational platforms or content provided to DepEd, CHED, TESDA, and other recognized educational institutions.
It includes access to digital learning materials, e-books, and educational platforms.
Bank and Nonbank Financial Intermediaries
Services from banks and nonbank financial institutions performing quasi-banking functions.
These are the services that are provided through digital platforms, such as mobile banking apps and digital wallets.
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