The Philippines’ Bureau of Internal Revenue (BIR) has released Revenue Regulation 003/2025, providing a comprehensive guide on implementing value-added tax (VAT) for digital services under Republic Act No. 12023. The regulation also defines the responsibilities and compliance requirements for digital service providers (DSPs).

This follows after the BIR released the draft revenue regulations on 8 November 2024 to implement the Republic Act No. 12023, which introduces a 12% VAT on all digital services used in the Philippines.

Under this Regulation, foreign non-resident DSPs must register with the BIR within 60 days of the regulation’s effective date and will be subject to VAT 120 days after it takes effect.

Local DSPs must meet regular VAT obligations when supplying digital services. If they act as electronic marketplaces, they must also withhold, declare, and pay VAT on transactions by non-resident suppliers within 10 days after the month’s end. Nonresident VAT-registered DSPs selling digital services to consumers in the Philippines must file VAT returns electronically and pay within 25 days after each quarter. They can choose monthly payments but must still submit a quarterly return.

Invoicing rules

Local DSPs must follow local invoicing rules, while nonresident DSPs must provide invoices in English with details like transaction date, buyer ID, description,  reference number, and total amount (including VAT). The invoices don’t need BIR registration.

Violating these regulations will result in penalties and possible criminal, civil, or administrative charges against DSPs and their officers and suspension of the DSPs’ operations by the BIR.

Earlier, the Philippines’ Department of Finance enacted Republic Act (RA) 12023 on 2 September 2024, imposing a 12% VAT on non-resident DSPs, including streaming platforms like HBO, Netflix, and Disney.