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Liz Servañez
Liz Servañez serves as Branch Manager in the Philippines.
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Christine Aguilar
Christine Aguilar serves as Head of Operations in the Philippines.
If you are a foreign company providing digital services to consumers in the Philippines, you may now be required to register with the Bureau of Internal Revenue (BIR), charge 12% VAT on your services, and file quarterly VAT returns. This obligation took effect on June 2, 2025 under Republic Act No. 12023, also known as the VAT on Digital Services Act.
This guide covers who needs to register as a Non-Resident Digital Service Provider (NRDSP), what documents you need, how the registration process works, and what ongoing compliance looks like.
Key Takeaways of the VAT on Digital Services Act (VDS)
Here are key provisions of the VDS for NRDSP businesses in the Philippines:
- RA 12023 imposes a 12% VAT on digital services consumed in the Philippines, regardless of whether the provider has a physical presence in the country.
- Registration is mandatory for NRDSPs whose gross sales from Philippine consumers have exceeded PHP 3 million in the past 12 months, or are reasonably expected to exceed this threshold in the next 12 months.
- Registration applies to all NRDSPs with Philippine-sourced digital service sales, regardless of whether transactions are B2B, B2C, or both. Even NRDSPs with purely B2B transactions must register and file returns.
- Registration and filing are done electronically through the BIR’s VAT on Digital Services (VDS) Portal, with the Online Registration and Update System (ORUS) as the fallback path.
- Non-compliance can result in surcharges, interest, penalties, and suspension or blocking of access to digital platforms in the Philippines.
What is NRDSP Registration?
Under RA 12023 and its implementing rules (Revenue Regulations No. 3-2025 and No. 14-2025), a Non-Resident Digital Service Provider is a foreign entity that supplies digital services to consumers in the Philippines without having a physical presence or permanent establishment in the country.
“Digital services” are defined broadly as any service supplied over the internet or an electronic network where the delivery is essentially automated and involves minimal human intervention. The BIR includes the following categories within scope:
- Online search engines and paid advertising services
- Online marketplaces and e-marketplaces (including app stores and e-commerce platforms)
- Cloud services (SaaS, PaaS, and IaaS)
- Digital content and media (streaming music, movies, games, e-books)
- Online advertising (display ads, sponsored content, social media advertising)
- Online learning platforms and digital courses
- Mobile applications and in-app purchases
- Webcasting, webinars, and digital intermediation services
- Electronic tickets for events or travel sold via online platforms
The list is not exhaustive. If your business delivers a service over the internet that is consumed in the Philippines, it likely falls within scope.
Note: If you provide these services to a VAT-registered business (B2B), the local business usually performs a “reverse charge” or withholding VAT. However, for B2C (individual consumers), the NRDSP is responsible for collecting and remitting the VAT.
Who is Required to Register?
You are required to register as a taxable NRSDP if you meet the following thresholds:
- The 3 Million Threshold: Your gross sales or receipts from digital services rendered to Filipino consumers for the past 12 months have exceeded PHP 3,000,000 (approx. USD 53,000).
- The Expected Threshold: There are reasonable grounds to believe that your gross sales or receipts for the next 12 months will exceed PHP 3,000,000.
Important: Registration is required regardless of whether your transactions are B2B, B2C, or both. Even NRDSPs that deal exclusively with Philippine business customers (where the buyer remits VAT via the reverse charge mechanism) must still register and file quarterly VAT returns. The BIR uses these filings to track total digital service transactions in the Philippine economy.
Voluntary registration is also available for NRDSPs below the PHP 3 million threshold. Companies that expect rapid growth or serve Philippine B2B clients who require VAT-compliant invoices often choose this route.
B2B vs B2C Treatment
The VAT treatment differs depending on your customer type.
- B2C (sales to individual consumers): The NRDSP must add 12% VAT to the price, collect it from the customer, and remit it to the BIR quarterly using BIR Form No. 2550-DS.
- B2B (sales to VAT-registered Philippine businesses): The Philippine business buyer is responsible for accounting and remitting the 12% VAT under a reverse charge mechanism, using BIR Form No. 1600-VT. The NRDSP does not collect the VAT directly but must still report these transactions on its quarterly return.
The burden of verifying B2B status is on the customer. If a Philippine customer provides a valid TIN and Certificate of Registration (COR), the transaction can be treated as B2B. For all other customers, the NRDSP must apply the 12% VAT.
NDRSP Registration with the BIR
Requirements for NRDSP Registration
To register as NRDSP, you need to have the following:
- BIR Form No. 1901-A: This is the specialized application form for non-resident digital service providers.
- Proof of Business Existence: An authenticated copy of your Certificate of Registration or Articles of Incorporation from your home country.
- Tax Identification Number (TIN): If you already have a TIN in your home country, this must be declared.
- Digital Signature: As the process is moving toward fully electronic, a valid digital signature or authorized signatory information is required.
- Appointment of a Local Representative (Optional but Recommended): While not strictly required to be a “resident agent” in the traditional sense, having a local partner like Emerhub to handle the filings and communications with the BIR is highly recommended to ensure no deadlines are missed.
Step-by-Step NRDSP Registration Process in the Philippines
To comply with NRDSP registration, you need to register your business with the BIR through the ORUS system, followed by VAT registration with the VDS platform. When you create an ORUS account for the first time, you also need to provide the name of your authorized representative in the Philippines. You can choose to appoint Emerhub during registration to manage your account on your behalf.
At the end of this process, you will obtain a Certificate of Registration (Form 2303). Here’s how:
- Submit all needed requirements: this includes the application form (1901-A) indicating the specific nature of your digital services, and authenticated copies of your foreign registration documents. Note that if these documents are not in English,
- Receive your Certificate of Registration (COR): Once the BIR validates your documents, they will issue your Certificate of Registration (Form 2303) electronically. This document contains your Philippine TIN and lists your tax types (VAT) and filing deadlines.
With our tax compliance team, we can arrange this registration on your behalf.
Post-Registration Compliance and Filing
Under the Digital VAT Law, once you obtain your TIN and Certificate of Registration, you are officially a VAT-registered taxpayer in the Philippines. Unlike resident taxpayers who file monthly, NRDSPs follow a simplified quarterly filing cycle designed specifically for cross-border digital transactions.
After NDRSP registration, you need to comply with the following:
Quarterly VAT Returns (BIR Form 2550-DS)
NRDSPs follow a simplified quarterly filing cycle. You must file BIR Form No. 2550-DS within 25 days following the close of each taxable quarter. Filings are submitted through the VDS Portal, and payments are made through the authorized payment channels integrated within the portal.
Even if you have zero taxable sales for a particular quarter, you are still required to file a “no transaction” return. Missing a filing triggers penalties regardless of whether VAT was due.
Collecting and Remitting VAT
For B2C transactions, add 12% VAT to your pricing for Philippine consumers, collect it at the point of sale, and remit it through your quarterly return.
For B2B transactions with VAT-registered Philippine buyers, you do not collect VAT directly, but you must still report these sales on Form 2550-DS. Your invoice must clearly indicate either that VAT has been included or that the Philippine business buyer is responsible for accounting and remitting the VAT under the reverse charge mechanism.
Invoicing Requirements
NRDSPs must issue a digital sales or commercial invoice for every transaction. There is no prescribed BIR invoice format for foreign providers, but the invoice must include:
- Transaction date
- Reference or invoice number
- Description of the digital service provided
- Total amount, clearly indicating whether VAT is included
- Your Philippine TIN
For B2B transactions where the VAT amount cannot be clearly stated on the invoice, a footnote or annotation must indicate that the Philippine buyer is responsible for accounting and remitting the 12% VAT.
Simplified Recordkeeping
One of the practical benefits of the NRDSP framework is that it does not require the complex subsidiary journals that resident Philippine taxpayers must maintain. NRDSPs only need to keep a simplified record of their Philippine-sourced sales. These records must be retained for at least 10 years.
Register and Stay Compliant with Emerhub
Emerhub provides corporate advisory and tax compliance services for foreign businesses operating in the Philippines. Our local team can act as your resident third-party service provider for NRDSP registration, manage your quarterly VAT filings through the VDS Portal, and advise on the B2B versus B2C treatment of your Philippine customers.
Contact our local experts for more information about NDRSP registration with a free consultation.
Frequently Asked Questions (FAQs) About NDRSP Registration in the Philippines
The NRDSP registration under RA 12023 is primarily for VAT purposes. Registering for VAT does not automatically mean you have to pay Philippine Corporate Income Tax, provided your activities do not constitute a “Permanent Establishment” under existing tax treaties.
If your annual sales are below PHP 3 million, you are considered a “non-VAT” taxpayer. You are not required to register for VAT, but you may still need to register as a non-VAT taxpayer if you want to operate legally and issue official receipts. Most foreign providers wait until they are close to the threshold.
You can opt for voluntary registration. This is often done by companies that expect rapid growth or those that want to appear more professional to their B2B clients who require VAT invoices.
The burden of proof is usually on the customer. If a customer provides a valid Philippine TIN and a Certificate of Registration (COR), they are treated as B2B. In these cases, the “reverse charge” mechanism applies, and the NRDSP does not need to collect the VAT directly. For everyone else, the 12% VAT must be applied.
RA 12023 grants the BIR, through the NTC, the power to order the blocking of digital services provided by non-compliant NRDSPs. While this is a “last resort” measure, the threat is real for high-profile platforms.
The BIR’s ORUS and other e-payment channels (like MyEG or PeraLink) often allow for various payment methods. However, many foreign companies find it easier to work with a local partner like Emerhub to facilitate the actual remittance of funds in Philippine Pesos (PHP).
