RA12023: 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
Republic Act No. 12023 significantly amends the National Internal Revenue Code of 1997, primarily by expanding the scope of value-added tax (VAT) to include digital services. This law makes both resident and nonresident digital service providers liable for assessing, collecting, and remitting VAT on services consumed in the Philippines. It also introduces new provisions for invoicing and accounting requirements for these providers, and outlines how the Commissioner of Internal Revenue can suspend digital services for non-compliance, with implementation supported by the Department of Information and Communications Technology (DICT) and the National Telecommunications Commission (NTC).
The law's impact on the general public is that it aims to level the playing field between traditional and digital businesses by taxing digital services, which could lead to increased government revenue. Five percent of the incremental VAT revenue from digital service providers will be specifically allocated for five years to develop creative industries, as defined by Republic Act No. 11904. While this could potentially lead to higher costs for consumers of digital services, it also signifies the government's adaptation to the digital economy and a dedicated funding source for the creative sector, potentially fostering economic growth and innovation in that area.