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The Philippines Bureau of Internal Revenue (BIR) on May 9, 2025, issued Revenue Memorandum Circular No. 47-2025, which provides further guidance, through the form of “frequently asked questions� (FAQs), on the application of the value added tax (VAT) on cross-border digital services rules. Read TaxNewsFlash, and TaxNewsFlash

Among other things, it states that nonresident providers of digital services (NRDSPs) must register on or before June 1, 2025, through the VAT on Digital Services (VDS) Portal once it is available.

However, prior to the VDS Portal roll-out, NRDSPs or their appointed resident third-party service providers should register through the Online Registration and Update System (ORUS), which is available on the BIR official website.

Major highlights of the circular include the following:

B2B vs. B2C

The circular provides that an NRDSP can verify if a buyer is engaged in business by obtaining the buyer's taxpayer identification numbers (TINs) and by providing a questionnaire or a tick box on their websites/platforms for customers to confirm that they are engaged in business in the Philippines. The NRDSP may also request other business registration documents, such as the BIR Certificate of Registration (COR), if the NRDSP's system is capable of obtaining/receiving this document.

Taxpayers engaged in exclusively B2B transactions

The circular provides that all NRDSPs are required to register or update their registration with the BIR even if their sales from the Philippines only constitute B2B transactions. Upon registration, they are still required to file tax returns with the BIR to report their B2B transactions.

B2B withholding

In B2B transactions when NRDSPs provide digital services to Philippine B2B customers, including the government or any of its agencies, the Philippine customer will account for the VAT by withholding and remitting the 12% VAT due on its purchase.

If, after the payment of VAT, the NRDSP later discovers that its Philippine customer is a B2B customer and the corresponding withholding VAT was already paid to the BIR by the latter, the NRDSP cannot apply for a refund of the erroneously paid VAT. However, the NRDSP may amend the previously filed BIR form to reflect the overpayment, which may be carried over to the succeeding quarter(s).

Scope

The circular clarifies the extent of the rules by stating that the regime also applies to teleconsultation platforms when appointments are booked through a website, applications, or e-marketplace. Virtual meetings via video or call conferences allow doctors and patients to engage in real-time discussions, providing and receiving essential medical assessments, diagnoses, treatments, and ongoing support.

This falls within the definition of digital services as "online consultations through a digital platform (i.e., website, applications, e-marketplace)" since the medical consultation cannot be booked, completed, and/or delivered without the use of information technology.

Marketplaces

The circular provides that when an NRDSP generates sales through an electronic marketplace (e-marketplace) but the payment for the digital service is made directly to the account of the NRDSP, the e-marketplace is not liable to pay the VAT because the payment for the digital service is made directly to the account of the NRDSP and thus, not within the control of the e-marketplace.

ÀÖÓ㣨Leyu£©ÌåÓý¹ÙÍø observation

While Revenue Regulation No. 03-2025 (published on January 17, 2025) defined “digital services� as any service delivered over the internet or other electronic networks using information technology, essentially automated in supply, it did not include, as in other jurisdictions, the condition of “minimal human intervention.� Read TaxNewsFlash.

It appears that the BIR does not consider the human intervention of doctors in this example to be “minimal� but rather focuses on the features of the platform to determine whether it qualifies as “digital services.� Businesses that have service offerings involving human intervention should therefore carefully review whether their services qualify as “digital services� under the NRDSP rules in the Philippines.

For more information, contact a ÀÖÓ㣨Leyu£©ÌåÓý¹ÙÍø tax professional:

Philippe Stephanny | philippestephanny@kpmg.com

Chinedu Nwachukwu | chinedunwachukwu@kpmg.com

Julius Patrick Acosta | jcacosta@kpmg.com