The IT and Business Process Association of the Philippines (IBPAP) represents the country’s globally competitive IT and Business Process Management (IT-BPM) industry. The Asian Consulting Group (ACG) is an international tax advisory and investment consulting firm founded by global tax policy expert Mon Abrea, advocating responsible taxation, investment promotion, and tax reform in the Philippines.
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The Philippines has established itself as a leading hub for globally traded services. But as the international economy becomes increasingly digital and borderless, elements of the country’s tax framework—particularly on cross-border transactions—must evolve to remain aligned with global standards.
This is not simply a technical issue. It is a question of competitiveness.
The IT and Business Process Management (IT-BPM) industry alone employs nearly two million Filipinos and generated approximately $42 billion in revenues in 2025. Sustaining this growth trajectory requires a tax environment that is predictable, transparent, and consistent with international norms.
Encouragingly, reforms are moving in the right direction.
A strong and productive dialogue among the Bureau of Internal Revenue (BIR), the Bureau of Customs, IBPAP, and ACG has created a platform for resolving practical issues affecting cross-border trade. This collaboration—anchored on constant communication with the government—reflects a shared objective: to strengthen the Philippines’ position as a competitive destination for global services and investment.
One concrete outcome is the recent issuance of Revenue Memorandum Circular (RMC) No. 24-2026. Building on earlier issuances (RMC Nos. 5-2024 and 38-2024), the circular refines the BIR’s audit framework for cross-border services.
Previous interpretations had raised concerns among taxpayers, particularly where cross-border service payments were treated as automatically subject to final withholding tax and value-added tax (VAT), often without sufficient consideration of where services were actually performed.
RMC No. 24-2026 introduces a more fact-based approach. It clarifies that not all cross-border services—such as consulting, IT outsourcing, telecommunications, financial services, engineering, education, and tourism—are automatically taxable. Instead, taxability depends on whether the services are performed within Philippine territory.
This is a critical refinement. It ensures that the mere cross-border nature of a transaction does not automatically trigger tax liabilities and requires revenue officers to establish a clear factual basis for assessments. For investors and service providers, this improves predictability and reduces the risk of inconsistent application.
At the policy level, momentum is further reinforced by high-level engagement with the Department of Finance (DOF). During recent discussions, Finance Secretary Frederick Go affirmed the government’s commitment to prioritize the legislation of the OECD Global Minimum Tax (GMT)—not only as a revenue measure, but as a strategic reform to align the Philippines with global standards and safeguard competitiveness.
This is a pivotal development.
The OECD-led global minimum tax framework is now being implemented across major economies. For the Philippines, timely adoption is essential to protect taxing rights, prevent base erosion, and ensure that incentives remain effective in attracting high-quality investments.
In support of this effort, ACG has submitted a draft GMT bill developed in consultation with international experts, including the OECD. This builds on years of collaboration on global tax policy—even prior to the Philippines’ participation in the Inclusive Framework—and positions the country to adopt the rules in a manner that is both compliant and investment-friendly.
Early reform gains are already visible. Improvements in VAT refund processing—with some claims resolved in under 60 days—demonstrate how administrative efficiency can directly enhance investor confidence.
However, further progress is needed.
Accessing tax treaty benefits remains complex and time-consuming, often requiring upfront withholding and prolonged refund processes. Meanwhile, consistent implementation of cross-border tax rules will be critical to fully realize the benefits of recent policy clarifications.
The path forward is clear.
First, digitalize tax treaty processes to reduce administrative friction and improve access to relief.
Second, sustain clear and consistent guidance on cross-border taxation, building on the principles established under RMC No. 24-2026.
Third, accelerate the digital transformation of tax and customs administration to enhance transparency, efficiency, and compliance.
These are practical, targeted reforms that can deliver immediate impact.
In a global economy where capital is highly mobile and decisions are data-driven, tax policy must be both competitive and credible. The Philippines is making important progress—through collaboration, clarity, and alignment with international standards.
The task now is execution.
Reforms must deliver results—not only to protect revenues, but to secure the country’s position as a trusted hub for global business.
