MANILA, Philippines — President Ferdinand Marcos Jr. on Wednesday signed into law the bill seeking to impose value added tax (VAT) on digital services provided by foreign companies.

In a ceremony in Malacañang, Marcos signed Republic Act (RA) 12023 or the Value Added Tax (VAT) on Digital Services Law before legislators, Cabinet members, and other stakeholders.

The new Law imposes a 12 percent VAT on non-resident digital service providers (DSPs) to generate additional revenue for the government and to level the playing field for local providers.

RA 12023 encompasses various services such as online search engines, online marketplaces, cloud services, online media and advertising, online platforms and digital goods.

Considered one of the priority measures of the Marcos administration, the new law also aims to address revenue losses due to ambiguities in existing legislation regarding the taxation of e-commerce transactions.

It specifically targets foreign companies not based in the country that continue to provide services to Filipino consumers.

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