Type: Draft Legislation
The Philippines Senate is reviewing Bill No. 2528, proposing a 12% VAT on foreign providers of digital services to consumers, aiming to level the playing field for local providers subject to the same VAT rate. The Bill, pending a second reading, could pass within months, having a similar version passed by the House of Representatives in November 2022.
The Department of Finance expects to generate P83.8 billion in revenue from 2024 to 2028 through these taxes. VAT would apply to online advertisement services, digital services, and other electronic services, excluding B2B transactions, which would use the reverse charge mechanism.
The proposed legislation likely includes a VAT annual sales registration threshold of PHP 3 million. Digital services subject to VAT include online advertisements, subscription-based digital services, and various electronic services delivered over the internet or other electronic networks.
This encompasses a wide range of services such as software licensing, online telecoms services, streaming media, mobile apps, and online gaming, among others.
Effective date: 6th February 2024
