CEBU CITY, Cebu (PIA) — The Bureau of Internal Revenue (BIR) will now collect taxes in the form of value-added tax (VAT) from foreign digital service providers (DSPs) operating their businesses in the country.
This developed after the passage of Republic Act 12023, which mandates the imposition of 12 percent VAT on foreign digital service providers as a way to generate additional revenue for the government.
During the 20th episode of ‘Kapihan sa Bagong Pilipinas’ in Central Visayas on Oct. 8 where BIR was the guest agency, BIR Revenue Region No. 13 regional director Douglas A. Rufino said they are now looking into the implementation of the new law as this would create a balance on the playing field among local providers in terms of tax compliance.
“The purpose of this is to level the playing field. Ito kasing mga e-services, hindi sila nagpapataw ng VAT, whereas yung ibang mga establishments and physical stores, hindi sila exempted from VAT. So unfair naman sa kanila kung itong mga foreign digital service providers ay hindi rin nagbabayad ng VAT,” noted Rufino.
According to the BIR, the new law will enable the government to collect additional taxes amounting to P180 billion annually, which will be another source of revenue to fund government programs and projects.
“We expect to collect more than P100 billion or around P180 billion in taxes (within a year) annually,” Rufino said.
BIR Revenue Region No. 13 covers the provinces of Cebu and Bohol.
The regional director added that they are currently waiting for the finalization of the law’s implementing rules and regulations so they can proceed with the implementation of the law.
“As soon as IRR is ready, we will immediately implement the law to collect VAT from these foreign digital service providers,” he said.
As mandated by the law, non-compliant digital service providers will face possible penalties, including the suspension of their business operations and the blocking of their digital service sites.
The BIR official also clarified that these foreign digital service providers have the discretion whether or not to absorb the value-added tax or pass it to their customers.
“It’s up to these digital platforms to absorb the VAT or pass it on to the digital subscribers,” Rufino concluded.
On Oct. 2, Pres. Ferdinand Marcos Jr. signed RA 12023, or the Value-Added Tax on Digital Services Law. (RGC/PIA7 Cebu)
