The Bureau of Internal Revenue (BIR) will allow non-resident digital service providers (DSPs) to appoint a third-party representative to handle their administrative affairs regarding the value-added tax (VAT) law.
“In registering with the BIR, a non-resident DSP does not need to have a local representative in the Philippines,” the BIR said in a revised implementing rules and regulations (IRR) dated Jan. 17.
The 10-page IRR draft previously required a state representative when registering for Republic Act 12023 or the VAT on digital services law.
However, it may appoint a third-party service provider (a person or organization, such as a law firm, acting firm, or consulting firm) for the purposes of receiving notices, maintaining records, filing tax forms, and other reporting obligations. ,” it added.
A non-resident DSP is required to notify the BIR in writing of the designated representative within 30 calendar days from the date of appointment.
For VAT purposes, the designation of a foreign service provider does not classify a non-resident DSP as a foreign company not always doing business in the Philippines, according to the draft.
Unregistered non-resident DSPs face suspension of doing business in the Philippines and other penalties, the BIR said.
The Department of Finance (DoF) said it expects to collect R7.25 billion in 2025 in VAT from DSPs and P21.37 billion next year.
VAT on social media and advertising is expected to bring the government P102.12 billion in 2029, a DoF official said.
The VAT system is scheduled to go live on March 31. — Aubrey Rose A. Inosante
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