The digital economy has become a driving force in global trade, reshaping how services are created, delivered, and consumed across borders.
In response, a growing number of countries are introducing tax measures targeting digital transactions, particularly those provided by non-resident entities.
As an example starting June 1, 2025, a 12% VAT will apply to digital services consumed within the Philippines, even if the provider does not have a physical presence in the country.
Under the new rules, digital services are broadly defined as any service delivered online or through other electronic networks with minimal human involvement. This includes a wide range of offerings such as cloud computing services, online advertising, digital marketplaces, streaming platforms, mobile apps, e-learning tools, and virtual goods like e-books, music, or software. If a digital service is used in the Philippines—determined by indicators such as the customer’s billing address, IP address, or payment method—it will be subject to the 12% VAT.
Introduction of 18% VAT on nonresident digital service providers to Sri Lankan consumers.
In SL this is one of the Tax reform proposals presented in December 2024, to the Parliament. Of course the overseas providers will pass the increase to the SL subscribers.
