Bureau of Internal (BIR) Commissioner Romeo D. Lumagui Jr. supports the goal of Republic Act No. 12023, which is to level the playing field between local brick and mortar companies and digital service providers, whether or not the latter have offices in the Philippines. This new law promotes fair competition because it equalizes the Value-Added Tax (VAT) to be paid by both local and foreign companies, as long as they are doing business in the Philippines.
"The BIR supports RA No. 12023. This will promote fair competition amongst businesses that are profiting from consumers here in the Philippines. A level playing field produces better products and services" Commissioner Lumagui stated
RA No. 12023 provides that Digital Service Providers, in the course of trade or business, renders services is subject to VAT. Digital services delivered by non-resident Digital Service Providers are considered rendered in the Philippines if the digital services are consumed in the Philippines.
Digital service refers to any service that is supplied over the internet or other electronic network with the use of information technology and where the supply of the service is essentially automated. This includes online search engines, online marketplace, e-marketplace, cloud service, online media and advertising, online platform, or digital goods.
“This is not a new tax. RA No. 12023 only ensures that the VAT being paid by local digital businesses, will also be paid by foreign digital businesses,” Commissioner Lumagui stated.###
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