THE value-added tax (VAT) on digital services is expected to become one of the largest revenue contributors among legislated tax reform measures, with collections projected to reach nearly P28 billion by 2029.
Based on the Budget of Expenditures and Sources of Financing for 2027, revenues from the VAT on digital services are expected to hit P23.06 billion this year, higher than previous projection of P21.4 billion.
This was forecast to further increase to P24.67 billion in 2027, P26.32 billion in 2028 and P27.92 billion in 2029 from the P6.57 billion generated in 2025.
Republic Act 12023, signed by President Ferdinand Marcos Jr. in October last year, requires foreign digital platforms to pay VAT on services consumed in the Philippines. These include online search engines, marketplaces, cloud services, online media, online advertising and digital goods.
Bureau of Internal Revenue (BIR) Commissioner Charlito Martin Mendoza has said that the tax would help the bureau achieve its revenue target for the year.
Based on the updated fiscal program approved by the Development Budget Coordination Committee during its 193rd meeting in June, the BIR is now expected to collect P3.393 trillion this year, down from the previous P3.579 trillion.
For next year, the bureau is tasked to collect P3.736 trillion.
Overall, legislated tax reform measures are expected to generate P29.47 billion in additional revenues in 2026, rising to P31.96 billion in 2027, P33.87 billion in 2028 and P37.39 billion the following year, up from P6.76 billion in actual collections in 2025.
Aside from the VAT on digital services, the BIR is expected to raise additional revenues from other tax measures, with collections projected at P23.01 billion in 2026, P24.51 billion in 2027, P25.30 billion in 2028 and P27.50 billion in 2029. These compare with the P3.96 billion collected in 2025.
Meanwhile, the rationalization of the mining fiscal regime is projected to generate P5.81 billion in 2026, P6.10 billion in 2027, P6.41 billion in 2028 and P6.73 billion in 2029. The measure did not contribute revenues in 2025 as it had yet to take effect.
Some tax measures, on the other hand, are expected to reduce government revenues.
The Capital Markets Efficiency Promotion Act (Cmepa) is projected to lower revenues by P4.88 billion in 2026, with the impact easing to P4.61 billion in 2027, P4.50 billion in 2028 and P3.58 billion in 2029.
Similarly, the Create More Act is projected to reduce revenues by P981 million this year, widening to P1.65 billion in 2027, P2.93 billion in 2028 and P3.57 billion in 2029, largely due to lower corporate income tax collections.
For the Bureau of Customs (BOC), additional revenues from an excise tax on pickup trucks under the Cmepa are projected at P6.46 billion in 2026, P7.44 billion in 2027, P8.58 billion in 2028 and P9.89 billion in 2029 from P2.80 billion in 2025.
The BOC is expected to collect P1.074 trillion next year, 6.29 percent higher than its increased target of P1.011 trillion for 2026.
