Philippines VAT on foreign digital services

The Philippines House of Representatives has consolidated some of the existing proposals for requiring foreign digital service providers (DSP) to levy and collect 12% VAT on sales to local consumers. Services to government bodies are subject to 5% VAT.

House Bill 7245 now clarifies that DSP located abroad will be liable to charging VAT if their annual sales are expected to exceed PHP 3m. Registration is for a simplified VAT return, without the right to deduct any input VAT incurred in the Philippines. Keep up to date with Avalara's global VAT on digital services tracker.

DSP characteristics include:

• Selling online goods or services
• Providing supplies via an online platform – either their own, or acting as an intermediary for other providers
• Subscription fee-based services for digital services
• Auction sites are included