Revenue Memorandum Circular (RMC) No. 59-2026
Date of Issuance: June 2, 2026
Effective Date: Immediately

“Further clarifying the provisions of Revenue Regulations No. 3-2025 to implement Republic Act No. 12023, entitled “An Act Amending Sections 105, 108, 109, 110, 113, 114, 115, 128, 236 and 288 and Adding New Sections 108-A and 108-B of the National Internal Revenue Code of 1997, as amended,” imposing the Value-Added Tax on Digital Services”

The Bureau of Internal Revenue (BIR) recently issued Revenue Memorandum Circular (RMC) No. 59-2026 to provide further clarification on the provisions of Revenue Regulations (RR) No. 3-2025, as well as to address certain issues relating to the implementation of Value-Added Tax (VAT) on Digital Services.

Key Clarifications:

1. Registration Requirement (Even if VAT-Exempt)

• NRDSPs must register with the BIR even if their services are VAT-exempt.
• They must still file VAT returns and report exempt sales properly.

2. Cross-Border Cost-Sharing (B2B Transactions)

• Who should register?
  • Normally: Foreign supplier = NRDSP
  • BUT if a foreign affiliate controls the transaction, it may be treated as the NRDSP if it:
    • Sets pricing or terms; or
    • Controls ordering/delivery of services.
• VAT handling:
  • Philippine subsidiary must:
    • Apply reverse charge; and
    • Withhold, file, and remit 12% VAT.

3. Online Booking Platforms

• Fees paid to NRDSP platforms (subscription, commissions and service):
  • Subject to 12% VAT; and
  • Philippine business must withhold and remit (B2B) via Form 1600-VT.
• NRDSP VAT liability applies only to:
  • Their subscription fees and commission fees/service fees, not the total booking amount.

4. Contracts Made Before Effectivity of VAT on DSP (June 2, 2025)

• Even if invoice has no VAT indicated, B2B buyers must:
  • Compute VAT; and
  • Apply reverse charge on the remaining period after June 2, 2025.

5. Online Advertising Services

• If Philippine entity uses digital ads, VAT applies—even if:
  • Ads target audience abroad
• Philippine buyer:
  • Must withhold/remit VAT (B2B)
• Philippine agency reselling to foreign client:
  • May qualify for 0% VAT if:
    • Service is consumed abroad; and
    • Paid in foreign currency

6. Digital Payment / Fund Transfer Services

• Nonresident providers facilitating real-time transfers:
  • Subject to 12% VAT on service fees if client is in PH.

7. E-Marketplaces Collecting VAT in Advance

• Even without receiving payment directly:
  • If platform collects VAT in advance, it is treated as a DSP/e-marketplace
  • Must:
    • File BIR Form 2550-DS; and
    • Remit VAT on B2C transactions.

8. Tax Treaty Does NOT Affect VAT

• Tax treaty cover only to income tax
• May be subject to VAT Zero-rated or VAT-Exempt not under tax treaty but pursuant to Sections 108, 109 and 295 of the Tax Code.

For any assistance or inquiry, you may contact us through the contact details below:

• +632.8982.9100
• info@reyestacandong.com

You may access the full version of this RMC through this link: