This article gives you a high-level overview of how the Philippines' VAT on digital services works and what Kintsugi supports for businesses selling digital services to customers in the Philippines.

Background

The Philippines imposes a 12% Value-Added Tax (VAT) on the sale of digital services consumed within the country. This applies to both resident businesses and foreign companies selling to Philippine customers.

The legal basis for VAT on digital services is the National Internal Revenue Code (NIRC), as amended by Republic Act (RA) 12023 (the Digital Services Act), signed on October 2, 2024. VAT collection for non-resident digital service providers officially took effect on June 2, 2025.

VAT is administered by the Bureau of Internal Revenue (BIR).

What Kintsugi Supports for the Philippines

Kintsugi currently supports the following for Philippine VAT compliance:

• Nexus and registration monitoring — helping you understand when your sales make you in scope for Philippine VAT and when you are required or expected to register (including the NRDSP rules under the BIR’s VDS Portal).

• VAT registration — both Standard VAT Registration (for resident businesses) and the simplified NRDSP registration via the BIR's VDS Portal (for non‑resident sellers).

• Tax calculation — applying the correct Philippine VAT treatment based on the buyer's VAT status:

  • charging 12% VAT on B2C sales where required, and

  • supporting the reverse‑charge for eligible B2B cross‑border sales (no VAT charged on the invoice; the Philippine business buyer self‑assesses where applicable).

• VAT return filing — quarterly VAT returns via BIR Form 2550‑Q (resident) or BIR Form 2550‑DS (non‑resident), filed on or before the 25th day of the month following the end of each quarter.

Who This Applies To

This applies to your business if:

• You are a resident Philippine business selling digital services (SaaS, cloud services, online platforms, etc.) to customers in the Philippines, or

• You are a non-resident digital service provider (NRDSP) — a foreign company with no physical presence in the Philippines — supplying digital services consumed by Philippine customers

Key Definitions

Digital services — Services supplied over the internet or an electronic network where delivery is essentially automated. This includes, but is not limited to: SaaS, cloud services, online search engines, online marketplaces, online media and advertising, online platforms, and digital goods.

Non-resident Digital Service Provider (NRDSP) — A foreign business with no physical presence in the Philippines that supplies digital services consumed in the Philippines.

VDS Portal — The BIR's dedicated VAT on Digital Services registration and filing portal, designed specifically for NRDSPs.

Important Notes

• The Philippines has a single, national-level VAT jurisdiction. There are no regional or local VAT layers on top of the national rate.

• For B2B sales by a non-resident seller, the reverse charge mechanism applies — the Philippine business buyer is responsible for withholding and remitting the VAT.

• For B2C sales by a non-resident seller, the NRDSP must collect and remit the 12% VAT directly.

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