BIR Consults Public on Proposed VAT for Digital Services

On Nov. 12, 2024, the Bureau of Internal Revenue (BIR) conducted a public consultation at its national office in Quezon City to discuss proposed revenue regulations implementing Republic Act No. 12023, which amends sections of the National Internal Revenue Code of 1997 to impose value-added tax (VAT) on digital services.

BIR officials, led by Commissioner Romeo D. Lumagui Jr., hosted the event. Assistant Commissioners Larry M. Barcelo of the Legal Service and Janette R. Cruz of the Client Support Service served as resource speakers. Department of Finance (DOF) officials, multi-sectoral group representatives, digital service providers, and other stakeholders were also present.

In his opening remarks, Commissioner Lumagui stressed the significance of the consultation as a platform for constructive dialogue on VAT in the digital economy. He reaffirmed the BIR’s commitment to modernizing tax policies to reflect the growing digital landscape.

“This consultation represents an important step in our commitment to ensuring a fair, transparent, and forward-looking tax framework for the digital economy,” Lumagui said.

“The introduction of VAT on digital services marks a significant development in our operational landscape. As the digital economy continues to expand, it is essential for our tax policies to adapt to meet the needs of our rapidly evolving economic landscape.”

Lumagui added that the initiative aims to enhance compliance with tax requirements and strengthen the global competitiveness of Philippine industries.

“The goal of today’s consultation is to engage in open, constructive dialogue on the imposition of VAT on digital services,” he said. “We recognize the complexities involved, but working collaboratively, we can address challenges and identify solutions that will benefit businesses, consumers, and our economy as a whole.”

Assistant Commissioners Barcelo and Cruz outlined the proposed regulations, focusing on provisions for VAT registration and compliance for local and foreign digital service providers. Their presentation highlighted measures to improve the efficiency of VAT collection in the digital sector.

The Q&A segment, moderated by Atty. Brianna Kay T. De Los Santos and Atty. Raymund L. Ipio, allowed participants to voice concerns and seek clarifications about the proposed regulations.

For those unable to attend, a recording of the consultation is available on the BIR’s official Facebook page. The event was streamed live and remains accessible through this link: https://bit.ly/PublicConsultationVATonDSPs.