News Release

VAT on digital services won’t turn off tech investors – BIR



The government is optimistic the newly signed VAT on Digital Services Law will not hinder President Ferdinand R. Marcos Jr.’s efforts to attract more foreign investors to the domestic digital market.

At a press briefing in Malacañang on Wednesday, Bureau of Internal Revenue (BIR) Commissioner Romeo Lumagui Jr. dispelled concerns that the new law could discourage foreign investors.

“We are confident that this will not discourage them from coming here in the Philippines,” Lumagui said.

Lumagui explained the imposition of VAT on digital services is not a new concept, and the new law only strengthens the BIR’s authority to collect taxes on digital services.

“Ginawa lang nating batas ito para mas masigurado na walang doubt sa implementation ng VAT. Pero internationally, we are following also international standards dahil malinaw rin naman sa international community na kung ano ang vatable sales pagdating sa digital services. So hindi ‘yan bago sa mundo,” he added.

Lumagui noted that previously, DSPs without presence in the Philippines were not paying taxes.

“Dahil wala silang presence dito sa Pilipinas, so wala silang binabayaran na buwis. Kaya sinasabi natin malaking tulong itong batas na ito,” Lumagui stressed.

Republic Act 12023 imposes a 12 percent VAT on digital services provided by both resident and non-resident DSPs in the Philippines.

“Hindi [ito] panibagong tax measure. Panibagong batas lang ito para mas malinaw na kailangan nilang magbayad ng tax dito sa atin,” he said.

The new law seeks to level the playing field among digital services providers and generate additional revenue to fund various government projects. |PND