Taxes from digital services hit P2.8 billion

MANILA, Philippines — The revenue generated through the implementation and collection of the tax on digital services has already reached P2.8 billion, according to an official of the Bureau of Internal Revenue.

There are currently 371 digital service providers registered, higher than the BIR’s expected number of non-resident digital services registrants, BIR chief of collection program division Glenn Alde said.

“During the initial conceptualization of this system, we were expecting more or less 300 digital service providers that will be registering on this system. But as of Sept. 9, we already have 371 registered digital service providers,” he said.

“We are expecting more as the day goes by, there are still new registrants availing themselves of this portal,” Alde added.

Total collections for business-to-customer transactions, or those that are consumed by non-value-added tax (VAT) registered customers, reached P1.65 billion, he said.

Total payments received by the tax agency amounted to P1.28 billion and P370.91 million is ongoing filing while P2.36 million is still pending for settlement or payment.

Alde said that the collection underscores an achievement for the BIR, as the agency had no information on non-resident digital service providers prior to its deposition.

“So, meaning we may be able to expect more or less 400 digital service providers. If there were more non-resident digital service providers registering, we’re also expecting an increase in collection,” Alde said.

Further, P1.14 billion has been collected by the BIR for business-to-business (B2B) transactions. Such a transaction means that Philippine companies are required to account for and remit the 12 percent VAT through a reverse charge mechanism. The remitted VAT may subsequently be credited as input tax by the local business.

The number of digital service providers with filings stands at 282, while those without filings have reached 89.

The tax on digital services, or Republic Act 12023, imposes a 12-percent tax and covers online search engines, e-marketplaces, cloud computing, digital media and advertising, streaming platforms and other digital goods.

Certain services, however, are excluded from the tax, particularly those classified as educational or banking-related.

The administration is expecting to generate over P100 billion in revenue from the tax on digital services by 2029.