[Ask the Tax Whiz] The expansion of VAT obligations to foreign digital service providers

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Screenshot from BIR info material

The BIR clarifies in a June memo circular that treaty provisions generally cannot be invoked to exempt non-resident or foreign digital service providers from VAT

With the implementation of Value Added Tax (VAT) on digital services under Republic Act No. 12023 and Revenue Regulations (RR) No. 3-2025, a question arises for foreign digital service providers and the local businesses that receive their services regarding their tax obligations, which were clarified under Revenue Memorandum Circular (RMC) No. 47-2025.

To provide further clarification, the Bureau of Internal Revenue (BIR) recently issued RMC No. 59-2026, which provides straightforward answers, particularly those involving non-resident digital service providers (NRDSP) registration, cross-border digital transactions, platform-based services, and the non-applicability of tax treaty relief to VAT.