The Philippines Bureau of Internal Revenue (BIR) issued Revenue Memorandum Circular No. 47-2025 on 9 May 2025, offering guidance through FAQs on applying VAT to cross-border digital services.
The Circular also states that nonresident providers of digital services (NRDSPs) must register by 1 June 2025, via the VAT on Digital Services (VDS) Portal when it becomes available. Until then, NRDSPs or their resident third-party service providers should register using the Online Registration and Update System (ORUS) on the BIR website.
The key highlights of the circular include the following:
Scope
The circular clarifies that the rules also apply to teleconsultation platforms when appointments are booked online via websites, apps, or e-marketplaces. Virtual meetings through video or calls let doctors and patients discuss in real time, providing medical assessments, diagnoses, treatments, and support.
E-marketplaces
The circular states that if an NRDSP generates sales through an e-marketplace but payments go directly to the NRDSP’s account, the e-marketplace is not liable for VAT as the payment is outside the control of the e-marketplace.
B2B vs. B2C
The circular states that an NRDSP can verify if a buyer is in business by obtaining their taxpayer identification number (TIN) and using a questionnaire or tick box on their website for confirmation. The NRDSP may also request other business documents, like the BIR Certificate of Registration (COR), if their system can process these.
B2B-only taxpayers
The circular requires all NRDSPs to register or update their BIR registration, even if their sales from the Philippines are exclusively B2B. Once registered, they must file tax returns with the BIR to report these transactions.
B2B withholding
In B2B transactions, when NRDSPs provide digital services to B2B customers in the Philippines, including the government, the customer will withhold and remit the 12% VAT on the purchase.
Earlier, the Philippines’ Department of Finance announced an amendment to the VAT requirements for non-resident digital services providers (DSPs) operating in the Philippines.
Before that, the BIR issued Revenue Regulation 003/2025, outlining how value-added tax (VAT) will apply to digital services. The regulation details the responsibilities and compliance requirements of digital service providers. This follows draft regulations that proposed a 12% VAT on all digital services used in the Philippines, effective 8 November 2024.
