BIR clarifies VAT on foreign digital services is not a new tax
The Bureau of Internal Revenue (BIR) clarified that the new 12% value-added tax (VAT) on foreign digital services is not a new tax. It aims to create fair competition between local and foreign digital businesses. President Ferdinand Marcos Jr. recently signed Republic Act No. 12023, which requires foreign digital service providers with sales over P3 million to register for VAT. They must also appoint a local representative to ensure compliance. The BIR stated that digital services are considered rendered in the Philippines if consumed there. The law covers various online services, including search engines, marketplaces, and cloud services.