Regulating eCommerce in the Philippines: Taxing Digital Services


The convenience of eCommerce in the Philippines grew in popularity among digital buyers and sellers. The increase of eCommerce in the Philippines has definitely skyrocketed, with its market projected to reach US$15.78B in 2024. However, the wide scale use of digital platforms such as eCommerce for online shopping makes it a difficult task to regulate digital services in the Philippines. To pursue and implement the efforts of regulating digital commerce, the Republic Act (RA) 11967 or the Internet Transactions Act (ITA) of 2023 was established that took effect last December 20, 2023, which aims to regulate digital services in the Philippines.

What is the Republic Act (RA) 11967

The Republic Act (RA) 11967 or the “Internet Transactions Act (ITA) of 2023 is a law that aims to promote maintenance of the bustling industry of eCommerce in the Philippines, consolidating the relationship between online sellers and online consumers. 

The ITA aims to institute the promotion and maintenance of a robust e-commerce environment in the country by building trust between online merchants and online consumers as a policy of the State. 

In addition to its push for the establishment of an E-Commerce Bureau and the clear definition of rights and responsibilities in online transactions, Section 5 of the ITA brings attention to an important provision. It states that any individual or entity participating in eCommerce and targeting the Philippine market, even without a physical presence in the country, must adhere to Philippine laws and regulations. This means that legal responsibilities cannot be evaded, ensuring accountability and protection for consumers and businesses online.

ITA Requires Online Sellers to Issue Invoices for ALL Sales

The ITA mandates that online sellers must issue paper or electronic invoices or receipts for all sales transactions. To facilitate compliance, a transitional period of 18 months from the ITA’s implementation is granted to affected online sellers, online retailers, eCommerce marketplaces, and digital platforms. 

While the ITA doesn’t explicitly address taxation, the requirement for issuing invoices or receipts hints at the government’s potential preparation for taxation on digital services, indicating a significant shift in the regulatory landscape for the online business community.

Action Taken in Implementing Taxes on Digital Services

Still under review and consideration by the Senate Committee in imposing the House Bill (HB) 4122, which seeks to implement a 12 percent value-added tax (VAT) on digital services offered by digital service providers (DSPs). 

Digital Service Providers are entities operating online platforms for buying, selling, or facilitating transactions related to digital services on behalf of individuals. This encompasses non-resident foreign entities providing various services in the Philippines for a fee, whether delivered electronically or otherwise. 

Additionally, Senate Bill (SB) 250, also under scrutiny by the same committee, proposes imposing VAT on any individual (including non-resident DSPs) engaged in selling, exchanging, leasing goods or properties, including digital or electronic items, or providing services, whether electronically rendered or not.

This bottomline is, both House Bill (HB) 4122 and Senate Bill (SB) 250, currently under review by the Senate Committee aims to address taxation issues concerning digital services in the Philippines. HB 4122 proposes a 12 percent VAT on digital services provided by digital service providers (DSPs), while SB 250 suggests imposing VAT on individuals, including non-resident DSPs, engaged in various transactions involving goods, properties, or services, whether digital or otherwise.

These bills reflect efforts to adapt taxation policies to the evolving digital economy, ensuring fair and equitable taxation while fostering economic growth and healthy transactions in the digital retail and commerce landscape.

Source: Philippine Star

What are the Benefits of Regulating eCommerce in the Philippines

Fair transactions

Regulation ensures that eCommerce transactions are conducted fairly, with transparent pricing, clear terms of service, and protection against unfair practices. By establishing standardized guidelines for online transactions, regulations create a level playing field where businesses compete based on the quality of their products and services rather than deceptive pricing strategies or hidden fees. 

Both Buyers and Sellers Can Be Held Accountable

Regulatory frameworks establish mechanisms for holding both buyers and sellers accountable for their actions, reducing the risk of fraud and enhancing trust in online transactions. 

Consumer Protection

Regulation safeguards consumers from deceptive practices, counterfeit products, and breaches of privacy, enhancing consumer confidence in eCommerce platforms. By setting minimum standards for product quality, advertising practices, and data protection, regulations ensure that consumers are well-informed and empowered to make informed purchasing decisions. This not only protects individuals from financial harm but also strengthens their trust in online shopping experiences, leading to increased consumer spending and market growth.

Market Stability

Regulations promote market stability by preventing monopolistic behavior, fostering healthy competition, and maintaining a level playing field for businesses of all sizes. This creates a dynamic and diverse marketplace where businesses can thrive based on merit and innovation rather than market manipulation or unfair advantages.

Revenue Generation

Implementing regulations enables the government to collect taxes from digital services in the Philippines, and eCommerce transactions, contributing to national revenue and supporting public services and infrastructure development. This not only helps to address budgetary deficits but also ensures that eCommerce businesses contribute their fair share to the broader economy.

Business Confidence

Clear regulations create a predictable and stable business environment, encouraging investment and fostering confidence among eCommerce entrepreneurs and investors. By providing clear guidelines for compliance and dispute resolution, regulations reduce uncertainty and mitigate risks associated with operating in the digital marketplace. 

Enhanced Trust and Credibility

Regulation builds trust among consumers and businesses by ensuring that eCommerce transactions are conducted legally and ethically, thereby enhancing the credibility of online platforms. Through measures such as consumer protection laws, data privacy regulations, and cybersecurity standards, regulations create a secure and reliable environment for online interactions..

Fostering Healthy Economy in the Digital Space

Regulation encourages innovation, entrepreneurship, and investment in the digital economy, driving economic growth and creating opportunities for employment and development. By providing a framework for fair competition, intellectual property protection, and market access, regulations stimulate creativity and innovation in the digital space. 

Shoppable Business: Helping in Regulating eCommerce in the Philippines

Shoppable Business is a B2B eProcurement + SaaS Marketplace platform that digitizes the way businesses approach procurement. 

In compliance with the Republic Act (RA) 11967 or the “Internet Transactions Act (ITA) of 2023, Shoppable Business issues digital invoices and receipts, ensuring transparency to every transaction made in it platform.

The digital invoice issued by Shoppable Business allows customers or businesses to easily document transactions for their annual tax compliance or for filing annual income tax returns.

Shoppable Business aims to digitize businesses the remaining 71% of businesses who don’t have online or digital presence. Regulating eCommerce in the Philippines represents a huge leap in fostering progress and innovation, empowering businesses with essential tools like streamlined procurement, sourcing, and supply chain solutions.

On the other hand, Shoppable Business offers peace of mind to both buyers and sellers through its Shoppable Guarantee program; guarantees that all products you purchase are 100% authentic and that you will receive the item you purchased or your money back. Shoppable eliminates any room for fraudulent activities within its marketplace.

Why Become a Seller in Shoppable Business

  • Access to a large customer base – giving businesses the opportunity to expand their reach and increase sales
  • Increased visibility and brand awareness – a platform for businesses to showcase their products/services and potentially attract new customers
  • Pay by Invoice – 30 Days Payment Terms

Why Become a Buyer in Shoppable Business

  • The Ultimate Platform for Procuring Branded Products in Bulk w/NO MOQ at Wholesale & Factory Direct Prices
  • 2000+ product categories
  • Save company time and money – Customized orders, RFQ for specific quantities, bundles, configuration, Track their orders, view purchase history
  • Compare Quotes easily
  • Guaranteed BIR Certified Sales Invoices/Receipts
  • Pay by Invoice – 30 Days Payment Terms

Register as a buyer or a seller at Shoppable Business and get the tools you need to streamline your procurement, sourcing, and supply chain process.


The skyrocketing industry of eCommerce in the Philippines is growing at a rapid pace, but regulating it is still an obstacle. Regulating the digital landscape of retail and commerce is a huge step for digitizing the way consumers and businesses buy for their needs.

However, steering through this obstacle is essential for ensuring a fair and secure digital marketplace for both consumers and businesses. By implementing enforceable regulations, the Philippines can unlock the full potential of its digital economy while safeguarding against potential risks and abuses.

Regulating the digital landscape of retail and commerce represents a monumental step towards modernizing and streamlining the purchasing process for consumers and businesses alike. It not only fosters trust and confidence in online transactions but also promotes innovation and competitiveness in the eCommerce sector. 

By overcoming the challenges of regulating digital services in the Philippines, it can pave the way for a vibrant and sustainable digital ecosystem that benefits all stakeholders, driving economic growth and prosperity in the digital age.

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