VATLive > Blog > Philippines > Philippines VAT on e-services Jan 2021 - Avalara

Philippines VAT on e-services Jan 2021

  • Aug 9, 2020 | Richard Asquith

The Philippines is considering levying Value Added Tax on foreign suppliers of electronic or digital services to its consumers. The House Committe on Ways and Means approved a bill on 5 August 2020 to introduce the measure.

The likely implementation date is 1 January 2021. There may be a VAT registration threshold of Peso 250,000. The bill defines digital services as "any service delivered or subscribed over the internet or other electronic network which cannot be obtained without the use of information technology." 

The Department of Finance is considering the need to fill an expanding tax gap as a result of the COVID-19 crisis. 10% VAT on foreign providers of download music, media, video, apps, software would follow global practice. The consumption tax may also be levied on social media advertising.

It would not just be the responsibility of the provider, but potentially also any intermediary or marketplace selling the service of an underlying supplier - termed a network orchestrator.

They may have to charge VAT, and/or make income tax withholdings. Returns will likely will be monthly, and filings and payments due within 10 days after the reporting period end.

Non-resident will have to appoint local agent.

Many countries around the world, including IndonesiaMexico and Chile are bringing digital services into their VAT nets this year. Europe imposed local VAT on e-services in 2015. Check the Avalara international VAT on e-services tracker. 

VP Global Indirect Tax
Richard Asquith
VP Global Indirect Tax Richard Asquith
Richard Asquith is the former VP Global Indirect Tax at Avalara
VATlive newsletter