REPUBLIC Act (RA) 12023, which imposed value-added tax (VAT) on digital services and amended several provisions of our National Internal Revenue Code (Tax Code), is a game changer in VAT taxation in the Philippines.
VAT is a transaction tax. For the government to be entitled to impose it, a transaction must occur or services must be rendered in the Philippines. RA 12023, however, expanded the "nexus" of VAT taxation on digital services to provide that "digital services delivered by nonresident digital service providers shall be considered performed or rendered in the Philippines if the digital services are consumed in the Philippines."
