RMC No. 59-2026 — Further clarifying the provisions of Revenue Regulations No. 3-2025 to implement Republic Act No. 12023, titled "An Act Amending Sections 105, 108, 109, 110, 113, 114, 115, 128, 236 and 288 and Adding New Sections 108-A and 108-B of the National Internal Revenue Code of 1997, as amended," imposing the Value-Added Tax on Digital Services

Bringing In Revenues for Nation-Bullding BUREAU OF INTERNAL REVENUE REPUBLIC OF THE PHILIPPINES National Office Building DEPARTMENT OF FINANCE Quezon City JUN 0 2 2026] PILIPINAS BAGONG

REVENUE MEMORANDUM CIRCULARNO. 0 5 9 - 2 0.2 6

SUBJECT: Further Clarifying the Provisions of Revenue Regulations No. 3-2025 to

Amended, " Imposing the Value-Added Tax on Digital Services Implement Republic Act No. 12023, Entitled "An Act Antending Sections 108-A and 108-B of the National Internal Revenue Code of 1997, as 105, 108, 109, 110, 113, 114, 115, 128, 236 and 288 and Adding New Sections

TO: All Internai Revenue Officials, Employees and Others Concerned

Regulations (RR) No. 3-2025 and address certain issues pertaining to the implementation of the Value-Added Tax (VAT) on Digital Service. This Revenue Memorandum Circular (RMC) is issued to further clarify Revenue

Q: If a nonresident digital service provider (NRDSP) supplies or delivers digital services to Philippine consumers and such digital services qualify for VAT-exemption, is the NRDSP still required to register with the Bureau of Internal Revenue (BIR) in accordance with RR No. 3-2025?

A1: Yes. If the NRDSP supplies digital services to Philippine consumers and such services are entitled to VAT exemption, it shall be required to register with the BIR and file VAT returns. If the sales of the NRDSP are VAT-exempt, these shall be indicated as VAT-

exempt sales in the VAT Returns.

Q2: In a cross-border cost-sharing arrangements involving (i) foreign digital service provider. sharing arrangement, and (ii) a Philippine subsidiary that ultimately consumes the digital (ii) a foreign affiliate contracts for and/or pays for such digital services under the cost-

service, such transaction is subject to VAT under RR No. 3-2025 even if the payment is through a cost-sharing agreement. The Philippine subsidiary will be responsible for withholding and remitting the VAT as a Business-to-Business (B2B) transaction.

a. Who between the foreign digital service provider or the foreign affiliate shall

D How will the parties comply with the filing and payment of VAT, as well as the register as NRDSP for purposes of RR No. 3-2025?

invoicing thereof?

A2: a. Generally, the foreign supplier of the digital service is considered as the NRDSP.

BiR, unless it is also supplying digital service transactions subject to VAT to other Philippine consumers. However, since the NRDSP is directly contracting with the foreign affiliate and has no direct transaction with the Philippine subsidiary, it shall not be required to register with M BUREAUOF INTERNAL REVEN! 00000248 RDSMAT NT DIVISION

BIR National Office Bidg., Senator Miriam Defensor-Santiago Avenue, Dlitiana Trunkline: 8981-7000 : 8929-7676 Website: www.bir.gov.ph uezo JUN 0'2 2026

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In this case, since the foreign affiliate is the one directly transacting with the foreign of the supply of digital services to its Philippine subsidiary, as follows: NRDSP and shall be required to register with the BIR if it has control on the key aspects supplier, on one hand, and Philippine subsidiary, on the other, it shall be deemed as the

T I sets, directly or indirectly, any of the terms and conditions under which the supply of digital services is made (i.e. price, payment terms, delivery is involved, directly or indirectly, in the ordering or delivery of digital of approval to supplier, and provision of order fulfiliment services. services, that is, having influence over the conditions of delivery, transmission conditions); or

it, as may be evidenced by the billing or invoice issued by the foreign affiliate. b. In any case, since this is a B2B transaction, the Philippine subsidiary, under the reverse charge mechanism, shall be liable for filing the required VAT return and withholding and remitting the twelve percent (12%) VAT due on the cost of the digitai service charged to

Q3: RGA Corporation, a Philippine VAT-registered property management company, offers among the property owners. RGA Corporation subscribes to various NRDSP online end-to-end short-term rental solutions for property owners (condominium owners, resort including guest communication, housekeeping and maintenance, and net income sharing operators and small hotels) across the Philippines. It manages the entire rental process booking platforms to facilitate reservations. These NRDSP platforms charge RGA Corporation a fixed listing or subscription fee for access and visibility, and additional commission fee/service fee for each successful booking.

a. Is RGA Corporation liable to withhold 12% VAT on the subscription fees and b Will the VAT liability of the NRDSP online booking platforms be attributed to remit the VAT to the BIR? commission fees/service fees paid to the NRDSP online booking platforms and

the full amount of sales received?

A3: a. Yes. The subscription fees and commission fees/service fees constitute payment for a digital service supplied by a NRDSP, thus, RGA Corporation, being an entity engaged in the VAT using the BIR Form 1600-VT within ten (10) days following the end of the business in the Philippines, is liable to withhold the VAT and remit the same to the BIR under the reverse charge mechanism for a B2B transaction. RGA Corporation shall remit month the withholding was made.

b. No. The NRDSP online booking platforms are only liable for the 12% VAT on digital services attributable to the subscription fees and commission fees/service fees earned from listings/subscription and bookings and not on the full amount received since it is the

were earned through the use of the internet for facilitating the bookings which is essentially automated. portion that qualifies as digital service as defined in RR No. 3-2025. The service fees

Q4: In December 2024, RBB Company paid for a one-year cloud subscription for the period not include the twelve percent (12%) VAT. Is RBB Company still liable to withhoid and covering December 2024 to November 2025. The invoice issued for the subscription did

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invoice? remit the VAT pursuant to RR No, 3-2025 despite the non-indication of VAT in the issued

A4: Yes. In a B2B transaction, the buyer of digital services is liable to withhold the VAT and the subscription period covering June to November 2025, in accordance with Section remit the same to the BIR under the reverse charge mechanism. Since the VAT on Digital Service Provider (DSP) became effective only on June 2, 2025, RBB Company must compute and remit the twelve percent (12%) VAT applicable to the remaining months of 6(B) of RR No. 03-2025.

Q5: MRA SG, a corporation organized and existing under the laws of Singapore, billed and Philippines. The target audience of the online advertisements is in Malaysia. issued an invoice to Multi-Media Agency, Inc., a Philippine-based corporation, for the invoice, without any mark-up, to a Malaysia-based client that is not registered in the online advertisements. Subsequently, Multi-Media Agency, Inc, charged and issued an

a Whether the digital services provided by MRA SG to Multi-Media Agency, Inc. are

b C Is the service fee earned by a Philippine-based multi-media company, for planning. Who is liable to file and pay for the 12% VAT? subject to 12% VAT?

buying, and managing advertising campaigns for the Malaysia-based client subject to the 12% VAT under RR No. 3-2025?

A5: a. Yes. The digital service is subject to 12% VAT in the Philippines. Under Republic Act to a consumer located in the Philippines, regardless of whether the service provider is a (RA) No. 12023 and RR No. 3-2025, the 12% VAT applies to digital services supplied location of the audience. resident or nonresident. In this case, since the user, procurer and payor of the online advertisement is a Philippine-based entity, the same is subject to VAT regardiess of the

b. Under the reverse charge mechanism, Multi-Media Agency, Inc., being an entity to the BIR as a B2B transaction. engaged in business in the Philippines, is required to withhold and remit the 12% VAT

c. Yes. It is subject to VAT at zero rate since its services are consumed by clients located abroad, provided that the same are paid for in acceptable foreign currency and accounted for in accordance with the rules and regulations of the Bangko Sentral ng Pilipinas (BSP)

Q6: Is a nonresident corporation engaged solely in facilitating real-time fund transfers

between parties to a digital transaction and not operating as an e-commerce platform, fund transfers under RA No. 12023 and its implementing rules under RR No. 3-2025? subject to the 12% VAT on the service fee for the digital services of facilitating real-time

A6: Yes. The nonresident corporation is subject to the 12% VAT imposed on the digital services. The 12% VAT shall be based on the amount of service fee collected. service if it collects service fees to a client located in the Philippines for the use of its

C s UREAU OF P Q7: sM are made directly to the NRDSP rather than the e-marketplace, in a scenario where the e. In relation to Question 21 of RMC No. 47-2025 in which the payments for digital services marketplace collects the VAT payments in advance on behalf of its online sellers on a G JUN 0 2 2026 3

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pre-collected or advance basis based on stock availability, is the e-marketplace considered a "digital service provider" or "e-marketplace" for VAT compliance purposes under RA No. 12023 and RR No. 3-2025? Is it required to file BIR Form 2550-DS and remit the 12% VAT on all business-to-consumer (B2C) transactions facilitated through its digital interface, despite not receiving the actual payments directly?

A7: Yes. The e-marketplace may still be considered a digital service provider or e- marketplace for VAT compliance purposes in the Philippines under RA No. 12023 and

DS and remit the 12% VAT on the covered B2C transactions. RR No. 3-2025, even if it does not directly receive payments for the digital services sold through its platform since it collects the VAT payments in advance. In such case, the e marketplace that collects VAT payments in advance shall be liable to file BIR Form 2550.

Q8: ABC Corporation, a NRDSP based in Singapore, is delivering digital services to

Singapore. Is the digital service supplied by ABC Corporation subject to VAT? consumers in the Philippines. It was issued a Certificate of Entitlement to Treaty Benefits (COE) pursuant to the Double Taxation Agreement (DTA) between the Philippines and

A8: Yes. ABC Corporation is subject to VAT on Digital Service. Tax benefits, either

preferential tax rate or tax exemption, under a tax treaty cover only Income Tax. However, the digital service may be VAT zero-rated or VAT-Exempt not under the DTA but pursuant to Sections 108, 109, and 295 of the National Internal Revenue Code of 1997, as amended.

All internal revenue officers, employees and others concerned are hereby enjoined tc strictly implement the provision of this Circular.

This Circular takes effect immediately.

3X 00000248 CHARLITO MARTIN R. MENDO2

E) BUREAL RECOROS MANAGEM VTER ATiTS 15 Commissioner of Internal Revenue e

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K-1-RBB/RGA