Value-Added Tax (VAT) on Digital Services Law (Republic Act No. 12023)
Republic Act No. 12023, also known as the Value-Added Tax (VAT) on Digital Services Law, is a law implemented in June 2025 that subjects a 12% tax on digital products and services by foreign providers. This includes digital games, microtransactions, and subscriptions from platforms like Steam and the Nintendo and PlayStation Stores.
About
Signed into law
On October 2, 2024, President Ferdinand "Bongbong" Marcos Jr. signed Republic Act No. 12023, or the Value-Added Tax (VAT) on Digital Services Law. The law imposes a 12% VAT on foreign digital service providers such as Steam.[1] At that time, only domestic digital service providers were subject to paying the VAT.
Implementation
Overview
Foreign digital service providers were required to register with the Philippines' Bureau of Internal Revenue by June 1, 2025. Their services would become subjected to 12% VAT starting June 2, 2025.
Steam
On March 17, 2025, Steam's "Taxes FAQ" documentation was updated to include the Philippines. Under the section "To Be Collected in the Future", Steam digital products purchased in the Philippines would have a 12% inclusive tax rate effective June 1, 2025.
Reference
- Marcos signs into law VAT on foreign digital services. October 2, 2024 at 9:15 AM, updated 1:33 PM. Anna Felicia Bajo, GMA Integrated News. GMA News Online. Retrieved on 2025-03-18.