Foreign digital companies’ growing compliance with value-added tax (VAT) rules since mid-2025 helped the Bureau of Internal Revenue (BIR) rake in approximately ₱8 billion in revenues last year.

This tax component is expected to drive the country’s main tax collection agency’s target this year to ₱3.58 trillion.

Speaking to reporters during the national tax campaign kick-off, BIR Commissioner Charlito Martin R. Mendoza said the overall tax haul from the imposition of the 12-percent consumption levy on digital services is expected to clock in at more than ₱20 billion, following the half-year collection in 2025.

“This year, we expect to collect much higher. Our projection is that we will collect more than ₱20 billion in VAT on digital service providers (DSPs) in 2026,” Mendoza said. This is a major contributor to the double-digit annual growth required to reach the 2026 target.

Mendoza expects the economy to improve, which the government targets to expand by five to six percent from the disappointing 4.4 percent in 2025.

VAT collection usually accounts for one-fifth of the entire collection of the BIR, income tax accounts for half, and excise tax accounts for a tenth, with others accounting for the remaining types of taxes.

Mendoza told reporters revenue collection is expected to benefit from the projected gross domestic product (GDP) growth this year, which will lift excise, income, and VAT receipts.

He is also banking on the BIR’s digitalization program, including real-time or near real-time monitoring, to curb leakages. Faster rollout of infrastructure projects this year is also expected to generate strong multiplier effects that will further support revenues.

“No matter how high the target or how hard the work, we should not lose sight of the fact that how we treat the public is as important to the bottom line as the money we remit to the treasury,” Mendoza said in his speech.

BIR DARES is a unified reform agenda that prioritizes digital and data transformation, audit accountability, and revenue protection, alongside employee welfare and service excellence.

This campaign aims to achieve the revenue target by shifting the Bureau’s focus to client satisfaction and systemic efficiency, including streamlining the business-closing process. He stressed that the revenue agency must “support taxpayers throughout the life cycle of the enterprise.”

Mendoza likewise asserted that the reforms the BIR is executing go beyond superficial changes, as recent developments call for “systemic reforms, not cosmetic changes.”

“DARES is not a fad or a passing fancy, because the pursuit of efficiency should never end,” the commissioner said.

Mendoza further said that just as business registration has been made simple at the start, the BIR must also ensure that the process is efficient and streamlined when enterprises shut down. He added that they are now working to simplify the requirements to make it easier to close a business.

Last year, the BIR collected ₱3.11 trillion, modestly exceeding the downscaled target of ₱3.10 trillion. It bore the brunt of the two-month suspension of tax audits.

Since June 2025, digital services consumed in the Philippines have been slapped with a 12-percent VAT under Republic Act (RA) 12023, pulling non-resident providers and previously untaxed online transactions into the formal tax system.