VAT and Digital Services: How Will the New Tax Law Affect You?

“This is not a new tax.”

President Bongbong Marcos signed Republic Act No. 12023, known as the “Value-Added Tax on Digital Services Law.” This law extends the 12% VAT to foreign digital service providers, ensuring they are taxed at the same rate as local providers. By doing so, it aims to level the playing field between local and international digital platforms, fostering an equitable and competitive digital market in the Philippines.

This VAT law is expected to generate an estimated PHP 105 billion in additional revenue over the first five years. These funds will contribute to national programs, infrastructure, and public services—ultimately benefiting Filipino citizens. It's important to note that this is not a new tax; rather, it extends existing VAT rules to the digital economy, ensuring foreign companies pay their fair share just like local businesses.

Credits

Carlo Chen Delantar Team Lead

Annika Henrico Researcher

Agnes Boncodin Creatives