Type: Legislation
The Philippines Senate has completed the final reading of Bill No. 2528, which imposes a 12% VAT on foreign providers of digital services to consumers. The bill, which mirrors one passed by the House of Representatives in November 2022, now awaits the President’s approval. This legislation aims to level the playing field for local providers subject to the existing 12% VAT rate and is expected to generate P83.8 billion in revenue from 2024 to 2028. The VAT will apply to online advertisements, digital services, and other electronic services, excluding B2B transactions which will follow the reverse charge mechanism. The bill also mandates the Bureau of Internal Revenue (BIR) to establish a simplified registration system for nonresident digital service providers.
Effective date: Upon Presidential approval
