Ceremonial Signing of the Value Added Tax on Digital Services Law 10/2/2024

Ceremonial Hall, Malacañan Palace
October 2, 2024

“This law is more than ensuring tax compliance, it is also in support of nation-building… Fairness, inclusivity and progress — these are the goals of this law,” President Ferdinand R. Marcos Jr. stressed as he formally signed Republic Act (R.A.) No. 12023 or the Value Added Tax (VAT) on Digital Services Law in Malacañan Palace.

In his remarks, the President emphasized that the Law is essential in addressing the gaps in the country’s tax system caused by rapid changes in the digital landscape. He clarified that this initiative does not introduce new taxes but strengthens and streamlines the authority of the Bureau of Internal Revenue (BIR) to collect VAT on digital services. This Law also outlines measures to help digital service providers (DSPs) comply with requirements under the Tax Code.

“With this law, we say that if your presence in the Philippine market is as real as your profits, then your tax responsibilities should also be equally tangible… if you are reaping the rewards of a fruitful digital economy here, it is only right that you contribute to its growth,” President Marcos Jr. conveyed.

“Whether you are a small tech start-up or a global tech giant based halfway around the world, if you are making money in the Philippines, you are part of our community. And with that comes a shared responsibility,” he continued.

The new Law imposes a 12 percent VAT on non-resident digital service providers (DSPs) to generate additional revenue for the government and level the playing field for local providers. It also encompasses various services such as online search engines, online marketplaces, cloud services, online media and advertising, online platforms and digital goods.

Moreover, educational and public service interest services such as online courses, webinars and other digital educational offerings are not subject to VAT to keep education affordable and accessible for every Filipino.

President Marcos Jr. reassured the nation that the government has taken a deliberate approach to ensure that this Law will not hinder innovation and growth. He added that the new measure would help collect around PhP105 billion in the next five (5) years, enough to fund the country’s education, health and infrastructure sectors.

Likewise, five percent (5%) of the revenues generated by this Law will be allocated to local creative industries, which means artists, filmmakers and musicians, among others, will directly benefit from it.

The Chief Executive expressed his gratitude to all the legislators behind the timely approval of the Law, saying that this is not just about the signing of the VAT on Digital Services Law but the beginning of a more equitable journey forward.

“To our partners in the digital space — let this be seen as an invitation to help build a Bagong Pilipinas, where innovation flourishes especially as we promote competition… This law shall bring in much-needed revenue to help build a better future for us all,” President Marcos Jr. said.

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