President Ferdinand Marcos Jr. officially enacted a new law on Wednesday that imposes a 12 percent value-added tax (VAT) on digital services offered by foreign providers. The signing took place in a ceremony at Malacañang Palace.
Republic Act No. 12023 targets providers of digital content such as movies, music, software, mobile apps, and online games, as well as services like online advertising, search engines, social networks, and webinars. The aim of the law is to recoup revenue losses from foreign companies that offer services to Filipino consumers but have not been subject to Philippine taxes due to unclear tax regulations on e-commerce.
According to the Department of Finance, the new law is expected to generate between P80 billion and P145 billion in revenue from 2025 to 2028, depending on taxpayer compliance. It also updates provisions of the National Internal Revenue Code of 1997 to reflect the growing role of digital transactions in the economy.
