12% VAT Now Applies to Foreign Digital Platforms, Says BIR

Starting June 1, 2025, the Bureau of Internal Revenue (BIR) has begun collecting value-added tax (VAT) from foreign digital service providers operating in the Philippines. This includes big names like streaming platforms and other online services that earn from Filipino users but have no physical offices in the country.

According to BIR Commissioner Romeo Lumagui Jr., these international platforms are now required to register through the BIR’s online system, file their VAT returns, and pay taxes digitally. The entire process is set up to be done online, so even without a local presence, these businesses can still comply.

The government is aiming to raise approximately ₱10.8 billion during the second half of 2025 through this move. While it's too early to tell if prices will go up, there’s a possibility that platforms might pass on the added cost to subscribers. However, companies are expected to tread carefully, as any price increase could turn away users.

No violations have been noted yet, but the BIR isn’t taking any chances. Commissioner Lumagui said that if a non-resident service refuses to register or pay taxes despite having Filipino users, their operations could be blocked in the country.

This VAT measure is part of the government’s effort to level the playing field for local and foreign companies while ensuring fair tax contributions from all businesses earning in the Philippine market.