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Why Grant Thornton
Whether you’re growing in one market or many, looking to operate more effectively, managing risk and regulation, or realising stakeholder value, our firms can help.
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Culture and experience
Grant Thornton’s culture is one of our most valuable assets and has steered us in the right direction for more than 100 years.
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Global scale and capability
Beyond global scale, we embrace what makes each market unique, local understanding on a global scale.
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Join our network
In a world that wants more options for high quality services, we differentiate in the market to grow sustainably in today’s rapidly changing environment.
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Leadership governance and quality
Grant Thornton International Ltd acts as the coordinating entity for member firms in the network with a focus on areas such as strategy, risk, quality monitoring and brand.
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Africa
24 member firms supporting your business.
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Americas
31 member firms, covering 44 markets and over 20,000 people.
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Asia-Pacific
19 member firms with nearly 25,000 people to support you.
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Europe
53 member firms supporting your business.
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Middle East
8 member firms supporting your business.
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Business consulting services
Our business consulting services can help you improve your operational performance and productivity, adding value throughout your growth life cycle.
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Business process solutions
We can help you identify, understand and manage potential risks to safeguard your business and comply with regulatory requirements.
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Business risk services
The relationship between a company and its auditor has changed. Organisations must understand and manage risk and seek an appropriate balance between risk and opportunities.
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Cybersecurity
As organisations become increasingly dependent on digital technology, the opportunities for cyber criminals continue to grow.
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Forensic services
At Grant Thornton, we have a wealth of knowledge in forensic services and can support you with issues such as dispute resolution, fraud and insurance claims.
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Mergers and acquisitions
We work with entrepreneurial businesses in the mid-market to help them assess the true commercial potential of their planned acquisition and understand how the purchase might serve their longer-term strategic goals.
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Recovery and reorganisation
Workable solutions to maximise your value and deliver sustainable recovery.
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Transactional advisory services
We can support you throughout the transaction process – helping achieve the best possible outcome at the point of the transaction and in the longer term.
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Valuations
We provide a wide range of services to recovery and reorganisation professionals, companies and their stakeholders.
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Sustainability advisory
We can assist you with a variety of sustainability advice depending on your needs, ranging from initial strategy development, reporting and compliance support, through to carbon measurement and management.

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IFRS
At Grant Thornton, our IFRS advisers can help you navigate the complexity of financial reporting from IFRS 1 to IFRS 17 and IAS 1 to IAS 41.
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Audit quality monitoring
Having a robust process of quality control is one of the most effective ways to guarantee we deliver high-quality services to our clients.
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Global audit technology
Our global assurance technology platform provides the ability to conduct client acceptance, consultations and all assurance and other attestation engagements.
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Sustainability assurance
Our sustainability assurance services are based on our global network of specialists, helping you make more efficient decisions for the good of your organisation.

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Corporate and business tax
Our trusted teams can prepare corporate tax files and ruling requests, support you with deferrals, accounting procedures and legitimate tax benefits.
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Direct international tax
Our teams have in-depth knowledge of the relationship between domestic and international tax laws.
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Global mobility services
Through our global organisation of member firms, we support both companies and individuals, providing insightful solutions to minimise the tax burden for both parties.
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Indirect international tax
Using our finely tuned local knowledge, teams from our global organisation of member firms help you understand and comply with often complex and time-consuming regulations.
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Transfer pricing
The laws surrounding transfer pricing are becoming ever more complex, as tax affairs of multinational companies are facing scrutiny from media, regulators and the public
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Africa tax desk
A differentiating solution adapted to the context of your investments in Africa.
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Sustainability tax
Through our sustainability tax advisory services, we can advise how environmental taxes, incentives, and obligations can impact your progress, requiring alignment with governmental and legislative pressures.

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Banking Holding banking to account: the real diversity and inclusion pictureWe explore how the banking sector can continue to attract, retain and nurture women to build a more diverse and inclusive future.
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Sustainability From voluntary to mandatory ESG: How banks can future-proof their operationsAs we move from voluntary ESG initiatives to mandatory legislation, we explore what the banking sector needs to prioritise.
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growthiQ Steering your company to long-term successHistory has something important to tell us about the difficulties of steering a business to long-term success – through seismic shifts in technology, consumer demands and product development. With that in mind it’s unsurprising that over half the world’s largest companies in the early 1900s had shut their doors by the late 1990s. Some, however, have endured.
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International Financial Reporting Standards Implementation of IFRS 17 ‘Insurance Contracts’The auditor’s response to the risks of material misstatement arising from estimates made in applying IFRS 17 ‘Insurance Contracts’
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IFRS Get ready for IFRS 17After twenty years of development the IASB has published IFRS 17 ‘Insurance Contracts’, find out more.
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Global business pulse - industry analysis Mid-market recovery spreads to more industriesThe index results for 13 key industries of the mid-market reveals a very uneven recovery from COVID-19
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Industries European Real Estate PodcastJessica Patel, Tax Partner at Grant Thornton UK speaks with tax partners and directors across the network to share their insights on the real estate market and some of the challenges.
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Cybersecurity One size fits nothingTechnology companies must adopt a new approach to digital risk: those that successfully develop a reputation for digital trust by demonstrating an unwavering commitment to cyber security and data privacy will be able to carve out a competitive advantage.
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- By topic
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Women in Business 2025
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Women in Business 2025: Impacting the missed generation
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Women in leadership: a pathway to better performance
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Women in Business 2024
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Women in business: Regional picture
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The key to international business: Investing in people
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Example Financial Statements
The 2025 Interim Financial Statements provide general guidance on preparing interim financial statements in accordance with IFRS Accounting Standards.
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IFRS 8
Our ‘Insights into IFRS 8’ series considers some key implementation issues and includes interpretational guidance in certain problematic areas.
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IFRS 16
Are you ready for IFRS 16? This series of insights will help you prepare.
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IAS 36
Insights into IAS 36 provides assistance for preparers of financial statements and help where confusion has been seen in practice.
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IFRS 17
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Key updates and support for the global implementation of Pillar 2.
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Global expatriate tax guide
Growing businesses that send their greatest assets – their people – overseas to work can face certain tax burdens, our global guide highlights the common tax rates and issues.
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International indirect tax guide
Navigating the global VAT, GST and sales tax landscape.
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Global transfer pricing guide
Helping you easily find everything you need to know about the rules and regulations regarding transfer pricing and Country by Country reporting for every country you do business with.
Please click on each section to expand further:
- In 2013, the Transfer Pricing Guidelines was issued by the Bureau of Internal Revenue (BIR) through Revenue Regulations (RR) No. 2-2013 which requires taxpayers to demonstrate that their transfer prices are consistent with the arm’s length principle (ALP) by preparing adequate and contemporaneous transfer pricing documentation (TPD).
- In 2019, the BIR issued Revenue Audit Memorandum Order (RAMO) No. 1-2019 or the Transfer Pricing Audit Guidelines.
- The TP rules are applicable on controlled transactions including sale, purchase, transfer and utilization of tangible and intangible assets, provision of intra-group services, interest payments and capitalization among others, between related/associated parties, where at least one party is assessable or chargeable to tax in the Philippines.
- The TP rules are also applicable by analogy, in relation to transactions between permanent establishment (PE) and its head office or other related branches hence, for TP purposes, the PE will be treated as a separate and distinct enterprise from its head office or other related branches/subsidiaries for tax purposes.
- The Philippine Transfer Pricing Guidelines are largely based on the arm’s length methodologies as set our under the Organisation for Economic Co-operation and Development Transfer Pricing Guidelines.
- Transfer pricing methods (TPM)
- Comparable Uncontrolled Price (CUP)
- Resale Price Method (RPM)
- Cost Plus Method (CPM)
- Profit Split Method (PSM)
- Transactional Net Margin Method (TNMM)
- The selection of a TPM is aimed at finding the most appropriate method for a particular case. Accordingly, the method that provides the most reliable measure of an arm’s length result shall be used.
- The BIR does not have a specific preference for any one method. Instead, the TPM that produce the most reliable results, taking into account the quality of available data and the degree of accuracy of adjustments, should be utilized.
- In exceptional circumstances where there may not be comparable transactions or sufficient data to apply the TPM the BIR may use the following approaches to verify whether the controlled transactions comply with the ALP:
- Extension of the transfer pricing methods. The comparable may be with enterprises in another industry segment or group of segments; and
- Use of a combination or mixture of the TPMs or other methods or approaches.
- In all cases, taxpayers should be able to explain why a specific TPM is selected or used in recording controlled transactions through proper documentation.
- Philippines has a self-assessment regime system of taxation; hence, the taxpayer is responsible for compliance with the tax law.
- In Philippines there are two documentation requirements for transfer pricing: (1) Information Return on Transactions with Related Party (BIR Form No. 1709) and (2) Transfer pricing documentation.
Accomplishment and submission of Information Return on Transactions with Related Party (BIR Form No. 1709)
- Taxpayers who meet all the three conditions below are required to submit the BIR Form No. 1709.
- The taxpayer is required to file an Annual Income Tax Return (AITR);
- The taxpayer has transactions with a domestic or foreign related party during the concerned taxable period; and
- The taxpayer falls under any of the following categories:
- large taxpayer;
- taxpayers enjoying tax incentives;
- taxpayers reporting net operating losses for the current taxable year and the immediately preceding two (2) consecutive taxable years; or
- a related party that has transactions with (a), (b) or (c).
- The form shall be filed to the BIR annually as an attachment to the AITR.
Preparation and submission of TPD (local file)
- Only taxpayers who are required to submit the BIR Form No. 1709 and meet any of the materiality thresholds below are mandated to prepare a TPD.
- Annual gross sales/revenue for the subject taxable period exceeding One Hundred Fifty Million Pesos (P150,000,000), irrespective of the source, and the total amount of related party transactions (RPTs) with foreign and domestic related parties exceeds Ninety Million Pesos (P90,000,000); or
- Sale of tangible goods involving the same related party exceeding Sixty Million Pesos (P60,000,000) within the taxable year; or
- Service transaction, payment of interest, utilization of intangible goods or other related party transaction involving the same related party exceeding Fifteen Million Pesos (P15,000,000.00) within the taxable year; or
- If the TPD was required to be prepared during the immediately preceding taxable period for exceeding (1) to (3).
- TPD shall be prepared contemporaneously which is prior to or at the time of undertaking the related party transactions (RPTs). Nevertheless, the BIR will also accept TPD prepared after the RPT but not later than the date of filing of the AITR for the fiscal/calendar year in which the RPT takes place.
- The TPD shall be submitted to the BIR within thirty (30) calendar days upon receipt of request by the tax authority during tax audit subject to a non-extendible period of 30 calendar days based on meritorious grounds.
- Nothing prevents any taxpayer, however, from preparing a TPD and presenting the same during tax audit to prove that its RPTs were conducted at arm’s length. If the taxpayer is not required to prepare a TPD, it still needs to reasonably assess and prove whether its dealings with related parties adhere to the ALP. After all, the burden of proof rests upon the taxpayer.
- Master file and CbCR are not yet a requirement in the Philippines.
- Local TPD is required for those taxpayers who meet any of the four conditions enumerated above.
- Local TPD is preferred over the TPD prepared by foreign parent company or related party because the local file provides a more detailed information relating to specific RPTs. Also, local TPD must apply the general and financial review criteria prescribed by the BIR in selecting comparables.
- The BIR will study and analyze the information contained in BIR Form 1709. This form is aimed to improve and strengthen the BIR’s TP risk assessment and audit. It shall be used to monitor taxpayer compliance. The Form will give the BIR an initial assessment of the total gross amounts of related party transactions (RPTs) per relationship type.
- With the information gathered, the BIR will perform TP risk assessment and make an informed decision, at the early state, whether or not to conduct a thorough review or audit of a particular entity or transaction.
- The BIR will focus its audit and commit its resources only on the most important or high-risk TP issues.
- Transfer pricing risk factors are specific factors or indicators that prompt tax authorities to initiate a risk assessment on a company’s related party transactions. These triggers help tax authorities identify potential non-compliance with transfer pricing regulations.
- Risk factors include:
- Transactions with entities located in countries or economic zones with low or zero tax rates;
- Level of taxes paid in the Philippines
- Worldwide effective tax rate
- Losses over several years
- Lower net operating profit compared to companies in the same industry
- Unusual profit margins
- Materiality of related party transactions, which may be measured from their proportion to sales or to net operating profit
- Source of income and tax credit availability
- Potential applicability of a tax treaty
- Significance of related party transactions not included in the components of the taxpayer's net operating profit such as interest expense, gain/loss on sale of assets, and exchange rate gain/loss
- Non-routine types of related party transactions, such as business restructuring that involves or does not involve intangible assets and sales of intangible property
- Related party transactions of a special nature, such as transfer of intangible assets (license), royalty payment, intra-group services, and interest expense.
- Late filing or non-filing of BIR Form No. 1709 is penalized with not less than P1,000 but not more than P25,000. In case of repetition of offense, the maximum penalty of P25,000.
- Where the BIR has found that a price in a controlled transaction is not at arm's length, the BIR may make an adjustment to reflect the arm's length price or interest rate for the transaction by substituting or imputing the price, or interest, as the case may be. In such instances, the adjustment will also be reflected by a corresponding adjustment upon request of the other party of the controlled transactions.
Adjustments will be made where:
- For the supply of property/goods or services, the consideration is less than the consideration that would have been received or receivable in an arm's length arrangement;
- For the acquisition of property/goods or services, the consideration is more than the consideration that would have been given or agreed to be given in an arm's length arrangement; or
- No consideration has been charged to the related/associated party for the supply or services.
- If the relevant conditions of the controlled transaction (e.g., price or margin) fall outside the arm's length range asserted by the BIR, the taxpayer should have the opportunity to present arguments that the conditions of the controlled transaction satisfy the ALP, and that the result falls within the arm's length range (i.e., that the arm's length range is different from the one asserted by the BIR). If the taxpayer is unable to establish this fact, the BIR must determine the point within the arm's length range to which it will adjust the conditions of the controlled transaction.
- Adjustments to transfer price made by the BIR arising from the tax audit would result the taxpayer liable to pay deficiency taxes plus incremental penalties.
- Manual search and selection criteria by using publicly available data such as commercial database and by applying the general and financial review criteria prescribed by the BIR in selecting comparables.
- Use of multiple-year data. Multiple-year data are used when they can improve the results of the comparability analysis. Analysis of multiple-year data can improve the process of screening of candidate comparables, for example by identifying comparables with significant differences from the tested party. In certain cases, this can lead to rejection of a candidate comparable or the detection of anomalies in candidate comparables. The use of multiple-year data in comparability analysis does not mean that the determination of the fair price or profit uses the average performance of multiple-year data.
- Per transaction or combined transaction approach. Testing of related party transactions can be done per transaction or by combining transactions, considering the facts and conditions. Testing of combined related party transactions is more appropriate, for example, when the transactions are closely linked or continuous.
- Use of an interquartile range.
- The BIR recently issued the guidelines and procedures for requesting Manual Agreement Procedure (MAP) assistance in the Philippines through RR No. 10-2022.
- However, for Advance Pricing Agreement (APA) program, the BIR will issue a separate Regulations.
- Exemption from filing BIR Form No. 1709 and preparation of TPD applies only to taxpayers who do not meet the requirements and threshold amounts.
- Not applicable
BIR issued Revenue Regulations (RR) No. 03-2025 to inform all concerned on the policies and guidelines for the implementation of the 12% value added tax (VAT) on digital services pursuant to Republic Act (RA) No. 12023.
According to RA No. 12023, a 12% VAT will be imposed on digital services consumed in the Philippines, whether provided by resident or nonresident digital service providers (DSPs).
I. Covered Persons
Digital service provider refers to an individual or juridical, resident or non-resident supplier of digital services to a buyer who uses the digital services in the Philippines. Nonresident DSP refers to a DSP that has no physical presence in the Philippines.
II. Covered Transactions
- Digital services. This refers to any service that is supplied over the internet or other electronic network with the use of information technology and where the supply of the service is essentially automated. It shall include, but not limited to:
- Online search engine
- Online marketplace or e-marketplace
- Cloud service
- Online media and advertising
- Online platform
- Digital goods
- Cloud and IT infrastructure, such as data storage, and web hosting
- E-commerce platforms and payment processing
- Targeted digital marketing and analytics
- Communication tools and collaborative software
- E-learning platforms and professional networking
- Data analytics and artificial intelligence for business insights
- Cybersecurity and regulatory compliance
- Masking and encryption services (e.g., virtual private network services)
- Online consultations through a digital platform (i.e., website, applications, e-marketplace)
- Interactive media, like online gaming, and augmented and/or virtual reality (AR/VR) experiences
- Digital goods. This refers to intangible goods that are delivered or transferred in digital form, including sounds, images, data, facts or combination thereof. These digital goods include, but are not limited to the following:
- Digital content purchases (e.g., download of e-books, music, videos, software, applications, digital media, e-games, and online courses)
- Subscription-based supplies of content (e.g., news, music, streaming media, online gaming, online courses)
- Digital art
- Supplies of software services and maintenance (anti-virus software, digital data storage, etc.)
- Licensing of content (e.g., access to specialized online content such as publications and journals, software, cloud-based systems, etc.)
- Telecommunication and broadcasting services
- Virtual assets
The VAT on digital services does not cover the sale, supply, or deliver of physical goods from a foreign territory to a consumer, user, or buyer in the Philippines, it being an importation of goods subject to customs duties, taxes, such as VAT or excise taxes, and other charges under RA No. 10863, and other applicable laws, rules, and regulations.
III. Transactions not covered by VAT on digital services
- The following digital services are exempt from 12% VAT:
- Educational services such as online courses, online seminars, and online trainings, rendered by private educational institutions, duly accredited by the Department of Education (DepEd), the Commission on Higher Education (CHED), the Technical Education and Skills Development Authority (TESDA), and those rendered by government educational institutions
- Sale of online subscription-based services to DepEd, CHED, TESDA, and educational institutions recognized by said government agencies; and
- Services of bank, non -bank financial intermediaries performing quasi-banking functions, and other non-bank financial intermediaries rendered through different digital platforms. This includes Virtual Asset Service Providers (VASPs) registered and classified by BSP as Non-Bank Financial Institutions.
- Other VASPs, including business involved in the participation and provision of financial services related to issuer’s offer and/or sale of a Virtual Asset shall be subject to the provisions of the Act and RR No. 03-2025.
IV. Registration Requirements for DSPs
- Nonresident DSPs
Nonresident DSPs shall register with the BIR within the period prescribed under Section 236 of the Tax Code through the VAT on Digital Services (VDS) Portal.
Nonresident DSPs with current covered transactions shall register with the BIR within the 60 days from the effectivity of RR No. 03-2025 through VDS Portal and submit the prescribed information therein.
Appointment of local representative/service provider
The nonresident DSP does not need to have a local representative in the Philippines. It may appoint a resident third-party service provider for purposes receiving notices, record keeping, filing of tax returns, and other reporting obligations. Upon appointment of the third-party service provider, the non-resident DSP shall notify the BIR in writing of the same within thirty (30) calendar days.
The appointment of a service provider shall not classify the nonresident DSP as a nonresident foreign corporation doing business in the Philippines.
- Resident DSPs
The resident DSPs shall register with the BIR following the policies and procedures under Section 236 of the Tax Code and other existing relevant laws, rules, and regulations.
V. Gross sales of DSP Subject to 12% VAT
There shall be 12% VAT imposed on the gross sales derived by a DSP from its supply or delivery of digital services by DSPs consumed in the Philippines.
The following information, among others, may be used to determine whether the digital service is consumed or used in the Philippines:
- Payment information (e.g., credit card information, bank account details); or
- Residence information of the buyer (e.g., home address, billing address); or
- Access information (e.g., mobile country code of SIM card, Internet Protocol address); or
- Any other information to establish the most reliable determination of the buyer’s location (e.g., business agreement, predominant place of consumption, language of digital content supplied)
Gross Sales in Foreign Currency
In case the service payment is in foreign currency, the DSP shall convert the payment into Philippine Peso currency using:
- The spot rate of exchange on a daily or a monthly basis using the average exchange rate during the month based on the Banker’s Association of the Philippines (BAP) published rates; or
- In the event that the BAP published rate is impractical or not feasible, the daily spot rate or monthly average rate based on other available exchange rates (BSP, Bloomberg, Reuters exchange rates, etc.) shall be used subject to the following conditions:
- A taxpayer electing to use forex rates other than BAP published rates shall state the reason in the VAT on Digital Services (VDS) Portal for using a source other than BAP published rates, and allow the BIR to have an access on the day-to-day or monthly average foreign exchange rates for verification and validation.
- The source of the foreign exchange rates used in converting foreign currency-denominated transactions, such as the URL/source where the foreign exchange rates are published or listed or a summary of the day-to-day or monthly average exchange rates to be used for the taxable year must be available for submission, together with other supporting documents during BIR verification and validation.
The election of the basis of conversion is irrevocable and must be used consistently in reporting for tax purposes for at least one (1) taxable year. The Commissioner of Internal Revenue may, however, prescribe the acceptable conversion rates to be used and specify when those rates shall be applied.
VI. Invoicing and Accounting Requirements of DSPs
The resident VAT-registered DSPs shall issue sales or commercial invoices for every sale, barter, or exchange of digital services under Sec. 113 of the Tax Code.
On the other hand, nonresident VAT-registered DSPs shall indicate the following information in the invoice in lieu of the requirements under Sec. 113 (B) paragraphs 1-4 of the Tax Code:
- Date of transaction;
- Transaction reference number;
- Identification of the buyer (including the TIN, if any);
- Brief description of the transaction;
- Total amount with indication that such amount includes VAT; and
- Breakdown of sales (subject to VAT, VAT-exempt, or VAT zero-rated) and the VAT on each portion of the sale
Nonresident digital service providers can issue electronic invoices without BIR registration or authority to print (ATP). The invoices must be in English or have an English translation and include all required details.
Nonresident DSPs classified as an online marketplace or e-marketplace shall also issue the relevant sale or commercial invoice following the rules prescribed for nonresident VAT registered DSPs.
The requirement to maintain subsidiary sales journal and purchase journal in which daily sales and purchases are recorded shall not apply to nonresident VAT-registered DSPs.
VII. Filing of tax returns and payment and remittance of VAT
Transactions | Resident VAT-registered DSP | Nonresident VAT-registered DSP | Unregistered nonresident DSP |
If sale is business to business (B2B) Transaction | File the VAT return and pay the VAT due thereon following the policies and procedures under Title III of the Tax Code and other existing relevant laws, rules, and regulations. |
The persons engaged in business, including government of the Philippines, or any of its political subdivisions, instrumentalities or agencies, including GOCCs shall be liable for:
The withheld VAT shall be considered as input VAT or part of the cost or expense, as the case may be, on the part of the withholding buyer. |
The persons engaged in business, including government of the Philippines, or any of its political subdivisions, instrumentalities or agencies, including GOCCs shall be liable for:
The withheld VAT shall be considered as input VAT or part of the cost or expense, as the case may be, on the part of the withholding buyer. |
If sale is B2C Transaction | File the VAT return and pay the VAT due thereon following the policies and procedures under Title III of the Tax Code and other existing relevant laws, rules, and regulations. |
The nonresident VAT-registered DSP shall be directly liable for electronically filing the VAT return and paying the VAT due thereon through simplified pay-only regime in the VDS Portal within 25 days following the close of each taxable quarter. The nonresident VAT-registered DSPs may opt to pay the VAT due on a monthly basis if they deem so convenient. However, if they opt to do so, they are still required to file the quarterly tax return and pay the corresponding liabilities. |
No provision. |
If the DSP is an electronic marketplace* |
In case the participant merchant/seller of the e-marketplace is a nonresident, the DSP is also liable for:
|
In case the participant merchant/seller of the e-marketplace is a nonresident, the nonresident DSP is also liable for
Provided, that the nonresident DSP has control on the key aspects of the supply and:
|
No provision. |
*Electronic marketplace (e-marketplace) refers to a digital service platform whose business is to connect online sellers or merchants, facilitate and concludes the sales, process the payment of the digital services through digital platform, or facilitate the post-purchase support within the platforms, while retaining oversight over the consummation of the transaction.
The DSPs and the Philippine buyers are required to determine whether or not its contracting party is engaged in business and may rely on the document on the documents and/or information (e.g., TIN) submitted by its contracting party and shall be absolved from any tax liability, absent any fraud or negligence on the part of such relying party.
In cases where a nonresident VAT-registered DSP, acting in good faith and having made reasonable efforts to obtain the appropriate evidence, is unable to establish the status of its buyer, it shall be presumed that its buyer is not engaged in trade or business, in which case, the nonresident VAT-registered DSP shall file and remit or pay the tax due, pursuant to the prescribed rules and procedures above.
There shall be interest, surcharge, and penalties imposed in case of late filing or payment of tax returns.
Nonresident VAT-registered DSPs shall not be allowed to claim creditable input tax.
VIII. Conduct of Post-Audit and Verification by the BIR
All the parties to the B2B and B2C transactions that are within the taxing jurisdiction of the Philippines shall be subject to post-audit and examination by the BIR.
IX. Suspension of Business Operations
Upon verification that any the DSP fails to: a) register its business with the BIR; b) comply with the provision of these Regulations, the CIR or his duly authorized representative has the authority to issue a Closure or Take Down Order to close the business operations.
The Closure or Take Down Order includes blocking of digital services performed or rendered in the Philippines by a DSP which shall be implemented by the Department of Information and Communication Technology, through the National Telecommunications Commission.
The closure of business operations under a duly approved Closure or Take Down Order shall not preclude the BIR from filing the appropriate administrative and criminal sanctions against the persons concerned if evidence so warrants, or in the case of juridical entities, against its responsible officers, under Run After Tax Evaders (RATE) Program of the BIR.
X. Penalties
Any violations of provisions of these Regulations shall be subject to the imposition of penalties and institution of appropriate criminal, civil, and administrative charges against erring DSPs and their responsible offices under the Tax Code, existing laws, rules, and regulations.
XI. Transitory Provisions and Effectivity
All nonresident DSPs required to register shall register or update with the BIR within sixty (60) days from the effectivity of these Regulations through the VDS Portal and shall immediately be subject to VAT after 120 days from the effectivity of these Regulations.
This issuance shall take effect fifteen (15) days following its publication in the Official Gazette or the BIR’s official website, whichever comes earlier. Per BIR’s official website, RR No. 03-2025 was posted on January 17, 2025.
- Not applicable
- No specific guidelines for the impact of COVID-19 pandemic.
- However, there is a general guideline for the losses in general. Companies incur losses for variety of economic and business reasons such as startup losses, market penetration strategies, and research and development failure. However, an independent company would not endure continuous losses without taking appropriate measures to correct the situation within reasonable time, as it would contradict fundamental business objectives of making profits.
- The fact that related/associated company continuously suffers losses may be an indication that is not being compensated fairly. In determining whether the losses are acceptable, it is important to ensure that the controlled transaction entered into is commercially realistic and make economic sense. A taxpayer needs to establish that the losses are commercial in nature within the context of its characterization. In this regard, a taxpayer is expected to maintain contemporaneous documentation which outlines the non-transfer pricing factors that have contributed to the losses.
For further information on transfer pricing in Philippines please contact:
Nikkolai Canceran |
Olivier D. Aznar |
Wendell Ganhinhin |
Marie Fe F. Dangiwan |