VAT on digital services to raise P123 billion by 2030

MANILA, Philippines — The newly enacted value-added tax (VAT) on digital services is expected to generate over P100 billion from 2026 to 2030, according to the Cabinet-level Development Budget Coordination Committee (DBCC).

With the goal of generating revenue from online platforms and digital transactions, the tax is expected to raise P123.2 billion for the government, the DBCC said in its latest mid-year report.

“The national government remains committed to pursuing a comprehensive digital transformation program and modernization initiatives within its revenue-collecting agencies that will make tax compliance, transparent, convenient, seamless, efficient and accessible,” the report read.

The collection for the taxation program for this year is projected to yield P3.6 billion.

Recently, the Bureau of Internal Revenue (BIR) collected P2.8 billion from the implementation of the tax on digital services, according to Glenn Alde, chief of the agency’s collection program division.

For next year, the Cabinet-level committee projects that the tax on digital service providers will generate around P21.4 billion in additional government revenue.

By 2027, the government expects to collect P22.8 billion in revenue from digital services, rising further to P24.4 billion by 2028.

By 2029, the tax program is projected to generate P26.3 billion, increasing further to P28.3 billion by 2030, according to government estimates.

Currently, there are 371 digital service providers registered, which is higher than the BIR’s expected number of non-resident digital service registrants.

In generating revenue, DBCC said that the BIR will prioritize its digital transformation roadmap, which aims to leverage digital technologies and infrastructure to enhance revenue generation, simplify taxpayer obligations, automate compliance verification and audit processes.

“In light of this, the revenue collections-to-GDP ratio is estimated to increase from 15.9 percent in 2025 to 16.8 percent or P7.13 trillion by 2030. These initiatives will be supported by the enacted laws and other tax administration reforms focused on digitalization,” the DBCC said.