Tax collections from foreign digital service providers reached ₱17.5 billion in the first six months of the year, driven by higher consumer adoption and improved compliance among global technology platforms.

Bureau of Internal Revenue (BIR) Commissioner Charlito Martin R. Mendoza told the Manila Bulletin that revenues collected by the government’s main tax agency from non-resident digital service providers (DSPs) have seen “encouraging” growth on the back of robust compliance.

Collections from foreign DSPs surged more than threefold during the first semester compared to the ₱6.6 billion logged in the initial six months of the value-added tax (VAT) on digital services program.

The government began collecting the 12-percent consumption levy on DSPs in June 2025, covering both business-to-business (B2B) and business-to-consumer (B2C) transactions.

It bears noting that the first-half collection already accounts for three-fourths of the national government’s full-year target of ₱23.1 billion.

Mendoza said the overwhelming expansion in collections from this segment is an “encouraging sign that implementation is gaining traction.”

Between B2B and B2C, Mendoza noted that the latter emerged as the “slightly bigger” contributor, though B2B transactions still made a substantial showing. “This means the growth is broad-based and reflects increasing digital activity from both individual consumers and businesses,” Mendoza said.

Major global platforms registered with the BIR include Meta, Google Asia, Netflix, Disney, Canva, Spotify, LinkedIn, Microsoft, OpenAI, and Valve.

While substantial, Mendoza noted that the expansion in tax haul was an anticipated development “as compliance improves and more digital transactions are properly captured.”

For the BIR, this trend implies that the digital VAT law is proving effective. “It is helping level the playing field between local and foreign digital service providers, improving tax compliance, and ensuring that the growing digital economy contributes its fair share to government revenues and, ultimately, to public services for our people,” Mendoza said.

However, the BIR chief believes it is still “too early” to make a definitive projection for the full year, responding to a query on whether the medium-term program necessitates upward revisions due to the robust first-half haul.

Mendoza also demurred on betting whether the first-semester figure would double by year-end to reach roughly ₱35 billion.

He explained that fourth-quarter collections are due in January 2027, deferring the complete tally of the current fiscal year's returns.

Of the government's tax reform measures, only the VAT on digital services brought in additional revenues. Meanwhile, the Capital Markets Efficiency Promotion Act (CMEPA) and the CREATE MORE Act reduced revenues by ₱2.3 billion and ₱342 million, respectively.

Revenue losses from CMEPA are expected to more than double to ₱4.9 billion in 2026, before dropping by 5.5 percent to ₱4.6 billion in 2027. Incurred losses from lowering corporate income taxes (CIT) under the CREATE MORE Act are projected to nearly triple to ₱981 million this year and swell further by 68.2 percent to ₱1.7 billion next year.

VAT collections from digital services form part of the BIR's overall tax collection, which stood at ₱1.63 trillion, boosted by higher returns from corporate income tax, personal income tax, VAT, other percentage taxes, and miscellaneous taxes.

More recently, the BIR collected ₱1.99 trillion—up 5.3 percent from a year earlier—as improved taxpayer services helped strengthen compliance and boost receipts.