Philippines VAT on e-services Jan 2021
- May 20, 2020 | Richard Asquith
The Philippines is considering levying Value Added Tax on foreign suppliers of electronic or digital services to its consumers. The House of Representatives has been presented with a bill to introduce the VAT measure.
The likely implementation date is 1 January 2021.
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 Indonesia, Mexico 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.