Author MRTC

Introduction

REVENUE MEMORANDUM CIRCULAR (RMC) NO. 047-2025

Salient Points
TopicDiscussion
Required Registration by Non-Resident Digital Service Providers (NRDSPs)All NRDSPs are mandated to register with the Bureau of Internal Revenue (BIR) in accordance with Section 5 of Revenue Regulation (RR) No. 3-2025. This requirement is applicable irrespective of the nature of the transactions involved, whether they are classified as Business-to-Business (B2B), Business-to-Consumer (B2C), or a combination of both.
 
In conjunction with this requirement, NRDSPs must file tax returns to enable the BIR to efficiently monitor and collect data pertaining to the total digital services transactions conducted by NRDSPs. Furthermore, this process will assist the BIR in ensuring compliance with tax regulations, facilitating policy formulation, and enhancing revenue collection.
 
NRDSPs are to register with the BIR via the VAT on Digital Services (VDS) Portal upon its availability. However, prior to the launch of said portal, NRDSPs or their duly appointed resident third-party service providers should register utilizing the Online Registration and Update System (ORUS).
 
NRDSPs have a period of one hundred twenty (120) days from the enactment of RR No. 3-2025, or on or before June 1, 2025, to complete their registration. However, this deadline was further extended to July 1, 2025, pursuant to RMC 58-2025.
 
The following information shall be required for registration:Name of business entity, including trade name;Name of the authorized representative, and Taxpayer Identification Number (TIN) in case of Local Authorized Representative, responsible for tax administration, if any;Registered foreign address; andContact information of NRDSP (e.g., Contact number, email address).  
Additionally, documentary requirements may include any official registration document issued by an authorized governmental regulatory body (e.g., Securities and Exchange Commission, tax authority) from the country of incorporation for the NRDSP (such as Articles of Incorporation, Certificate of Tax Residency) that explicitly states the name of the NRDSP.
Required election for a Local Representative by NRDSPs for purposes of registrationNRDSPs are not mandated to appoint a local representative in the Philippines for the purpose of registering with the BIR. Nevertheless, NRDSPs have the option to designate a resident third-party service provider to facilitate various functions, including:Registration;
Salient Points
TopicDiscussion
Required election for a Local Representative by NRDSPs for purposes of registration
Filing and payment of tax returns;Receiving notices; Record-keeping; andOther reporting obligations.  
It’s important to note that the designation/election of a third-party service provider does not result in the NRDSP being classified as a resident foreign corporation conducting business within the Philippines.
Where to register?For NRDSPs with a local representative in the Philippines, manual registration must be completed at the BIR Revenue District Office (RDO) No. 39, located in South Quezon City.
Evidence of BIR RegistrationA Certificate of Registration (COR) or BIR Form No. 2303 containing the assigned TIN and other registration details shall be issued to NRDSPs.
Tax LiabilityAn NRDSP shall be liable for a 12% Value Added Tax (VAT) on their gross sales from the supply and delivery of digital services consumed or used in the Philippines. During its registration, NRDSP shall select VAT as its tax type.
Penalty for failure to registerA penalty under Section 13 of RR No. 3-2025, and suspension of business operations under Section 12 of the same regulations shall be imposed, if warranted.
VAT TreatmentsCross-border B2B Transactions
In the context of cross-border B2B transactions, Philippine purchasers are required to account for VAT via the reverse charge mechanism. Consequently, these purchasers will bear the responsibility to: (i) electronically file the mandatory remittance return; and (ii) withhold and remit the applicable 12% VAT on the imported goods or services.
 
Cross-border B2C Transactions
NRDSPs hold direct liability for the following obligations in cross-border B2C transactions: (i) the electronic filing of the necessary remittance return; and (ii) the payment of VAT through the simplified pay-only regime accessible via the VDS Portal, based on their gross sales of digital services consumed in the Philippine market.
 
Digital Services through an Online Marketplace or e-marketplace
For DPS operating through online marketplaces or e-marketplaces, specific operational guidelines must be adhered to.
Salient Points
TopicDiscussion
VAT TreatmentsThese include instances where the DSP controls critical elements of the supply and engages in either or both of the following activities:It sets directly or indirectly any of the terms and conditions under which the supply of digital services is made; orIt is involved in the ordering or delivery of the digital services whether directly or indirectly.
Invoicing RequirementsNo required form of an invoice for NRDSPs. However, the following information as provided by the law, shall be present:Date of the transaction;Transaction Reference Number;Identification of the consumer (including the TIN for B2B);Brief description of the transaction; andThe total amount with the indication that such amount includes VAT.  
For NRDSPs engaged in B2B transactions, if the VAT amount not included in the invoice, a footnote/annotation on the invoice indicating that the Philippine business consumer/buyer is responsible for accounting and remitting the 12% VAT thereon.
Reckoning point for VAT LiabilityNRDSPs shall be liable to VAT after one hundred twenty days (120) from the effectivity of the RR No. 3-2025, or starting June 2, 2025.
 
In relation thereto, NRDSPs shall utilize BIR Form No. 2550-DS in filing in filing the VAT return and/or payment/remittance of the VAT due thereon, which shall be available and generated in VDS Portal.
Claim of Input tax allowed?No.
 
Section 7 (B) of RR No. 3-2025 provides that a non-resident VAT-registered DSPs shall not be allowed to claim creditable input tax.
Are refunds allowed?No.
 
In the event that the Philippine consumer/buyer remitted and paid the VAT due in B2B transactions and the NRDSPs also paid the related VAT, the latter cannot file for refund over the erroneously paid VAT. However, it may amend its previously filed return to reflect the overpayment which may be carried-over to the succeeding quarter/s.
RA No. 12023 applies to services other than digital services?No. Only digital services as defined in RA No. 12023 shall be subject to VAT.
 
Digital services as defined in such law refers to any service that is supplied over the internet or other electronic network with the use of information
Salient Points
TopicDiscussion
RA No. 12023 applies to services other than digital services?technology and where the supply of service is essentially automated. It shall include, but not limited to:Online search engine;Online marketplace or e-marketplace;Cloud service;Online media and advertising;Online platform; orDigital goods.
Certificate of tax Exemption – required to be presented to avail of the VAT exemption on the sale of online subscription- based services to educational institutions accredited by the Department of Education (DepEd), Commission on Higher Education (CHED), Technical Education and Skills Development Authority (TESDA)No.
 
For the sale of online subscription-based services to educational institutions, it shall only present to the DSP the accreditation/recognition from DepEd, CHED, and TESDA, as the case may be, in order to avail of the VAT exemption.
Required substantiation of Philippine business consumer/buyer for its purchases from NRDSPsPhilippine business consumer/buyer shall present the filed withholding VAT return or BIR Form No 1600-VT as proof to support its claim for input VAT on purchases of digital services from NRDSPs in accordance to Section 7 (C) of RR No 3-2025.