Philippines imposes 12% VAT on foreign digital service providers to raise P105 billion

President Marcos has signed a new law imposing a 12% value-added tax (VAT) on foreign digital service providers (DSPs) in the Philippines. This law aims to raise approximately P105 billion over five years and ensures that foreign DSPs compete on equal terms with local providers. The law covers various online services, including streaming platforms like Netflix and Amazon, while exempting educational services. Foreign DSPs must register for VAT if their sales exceed P3 million, with penalties for non-compliance. Revenue from the tax will support public services and the creative economy, with 5% allocated for developing local creative industries. The Bureau of Internal Revenue plans to simplify the registration process for foreign DSPs.