Registration for 12% digital VAT extended

MANILA, Philippines — The Bureau of Internal Revenue (BIR) has extended the registration of all non-resident digital service providers (NRDSPs) to July 1 in line with the imposition of the 12-percent value-added tax (VAT).

In its latest revenue memorandum circular, the BIR said the deadline for the online or electronic registration of all NRDSPs is July 1. The original deadline was set on June 1.

The BIR said the extension was due to the unavailability of the VAT on the digital services portal and the online registration and update system.

The systems remain offline as a result of ongoing system migration activities.

NRDSPs are digital service providers that have no physical presence in the Philippines.

According to the BIR, existing NRDSPs already registered with the agency but not yet classified as NRDSP taxpayers should update their registration information accordingly.

Failure to register for VAT does not exempt NRDSPs from their obligation to file the required tax return and pay the corresponding tax due.

It also does not exempt buyers or customers engaged in business from filing the appropriate remittance return and withholding and remitting the VAT due on their purchase of digital services.

NRDSPs can register with the BIR directly or through a third-party service provider.

NRDSPs who fail to register for VAT will be slapped with applicable penalties, appropriate criminal, civil and administrative charges under the Tax Code, and the possible suspension of business operations.

The 12 percent VAT on digital services applies to online search engines, marketplaces, cloud services, media and advertising, online platforms and digital goods.

The law is expected to provide at least P105 billion in revenue for the government until 2029.