How vat / sales tax works in Philippines
Philippine VAT defaults to 12% on sales of goods and services past PHP 3 million of annual turnover, with quarterly returns and e-invoicing phasing in through 2026.
Non-resident digital sellers to Philippine consumers register and remit 12% from June 2025, with B2B reverse charge and marketplace collection mechanics layered on flows.
Exports and foreign-currency service sales zero-rate, while health, education, and agricultural supplies are largely exempt.
Tax rates at a glance
- Standard VAT
- 12%
- Digital services
- 12%
- Zero-rated supplies
- 0%
- Exempt supplies
- Exempt
- VAT threshold
- PHP 3m
- Filing rhythm
- Quarterly
Who benefits most
These profiles tend to benefit most when the rules match their real residence, payroll and business setup.
E-commerce sellersSaaS foundersFreelancersExpatsCross-border traders
Watch out for
- Treaty relief never exempts digital VAT: income-tax treaties do not touch VAT treatment, which follows domestic zero-rating and exemption rules only.
- Transitional subscriptions spanning June 2025 need proportional VAT allocation, and uninvoiced periods still draw buyer-side withholding.
- Marketplace collection can reclassify platforms as digital sellers, pulling facilitated B2C flows into platform returns.
- CREATE MORE and CMEPA reforms move adjacent income and transaction taxes simultaneously, so VAT planning needs parallel-track awareness.
Frequently asked questions
What is the VAT rate in the Philippines?
The Philippines applies 12% VAT in 2026 on goods and services past PHP 3 million turnover, with zero-rating for exports and exemptions for health, education, and agriculture.
Do foreign digital sellers charge Philippine VAT?
Yes from June 2025: non-resident digital sellers to consumers register and remit 12%, with B2B reverse charge and marketplace mechanics on platform flows.
How often are Philippine VAT returns filed?
Quarterly as standard, with e-invoicing phasing in through 2026 and monthly rhythms for large taxpayers.