VAT is the abbreviation of Value Added Tax. VAT is, in general, due when goods and/or services are sold. It applies to most goods and services that are bought and sold for use or consumption in the Philippines. It is a consumption tax because it is ultimately borne by the final consumer.
Where Zoom makes a supply to a non-business customer (B2C), Zoom is required to calculate, charge and remit VAT to the Bureau of Internal Revenue (“BIR”). The customer in this scenario should pay the VAT charged directly to Zoom. Zoom will then remit the VAT collected to the BIR.
Where Zoom makes a supply to a business customer (B2B), i.e., a customer engaged in business activities in the Philippines (including the Government of the Philippines or any of its political subdivisions, instrumentalities, or agencies), Zoom will not charge VAT on the invoice.
In this scenario, it is the customer's responsibility to account for and timely remit the VAT due on the transaction to the BIR under the “reverse charge” mechanism. You will be treated as a business customer (B2B) if you provide a valid Tax Identification Number (“TIN”) to Zoom.
For the avoidance of doubt, for B2B transactions where the customer is responsible for accounting and timely remitting the VAT due to the BIR under the “reverse charge” mechanism, the VAT that the B2B customer reports to the BIR should be calculated on a tax-exclusive basis. The B2B customer must then ensure that Zoom receives the full payment for the charges (these being the nontax amounts) shown on the invoice.
Video conferencing and telecommunication services supplied by Zoom fall under the Philippines' definition of digital services as per Republic Act No. 12023. Therefore, Zoom (as a non-resident digital service provider) is required to calculate and charge VAT on invoices issued to non-business customers in the Philippines.
A TIN is a unique 9-digit number issued by the Bureau of Internal Revenue (“BIR”) that identifies taxpayers in the Philippines. For branch offices, the TIN typically consists of the head office’s 9-digit TIN plus a 3-digit branch code.
If you are a business customer and you want to provide your TIN to Zoom, follow the steps below depending on where your billing portal is located in the left navigation menu of the Zoom web portal. Not sure how to identify where your billing portal is located? Learn how to locate your billing settings.
Zoom performs periodic validation checks of customer TINs to ensure they are valid. If, during these periodic validations, it is identified that your TIN is not valid, Zoom may automatically update your account such that VAT will be payable to Zoom in relation to supplies issued to you.
In such cases, VAT will continue to be payable to Zoom for services supplied until a valid TIN is provided.
If a customer in the Philippines is unable to supply a valid TIN or is not acquiring Zoom’s services for the purposes of a business activity that it carries on in the Philippines, Zoom will charge and collect Philippine VAT on its supplies.
Zoom will treat any customers with a ‘Sold To’-address in the Philippines as being resident in the Philippines. This information is subject to cross-referencing against other data to verify that the ‘Sold To’ country is accurate.
It is your responsibility as a customer to ensure that your ‘Sold To’-address is accurate.
Sale of subscription-based services, such as Zoom’s services, to DEPED, CHED, TESDA and educational institutions recognised by the aforementioned government agencies may be exempt from VAT.
If this applies to you, please contact billing to update the tax exemption associated with your account. You are required to provide proof of accreditation/recognition from DEPED, CHED or TESDA in order to avail the tax exemption.
If you are not a business customer or have not provided a valid TIN to Zoom, there are no obligations for you as a customer. Zoom will charge VAT on invoices issued to you and timely remit the VAT collected from you to the BIR.
If you are a business customer (or a government entity) and have provided a valid TIN to Zoom, you are required to account for and timely remit the VAT due on the transaction to the BIR under the “reverse charge” mechanism. For the avoidance of doubt, VAT due under the “reverse charge” should be calculated on a tax-exclusive basis such that Zoom receives the full payment for the charges (these being the non-tax amounts) shown on the invoice.
The TIN may be updated at any time in Zoom's billing portal. If entered before the next invoice, Zoom will not charge VAT on the next invoice or future invoices issued to you. If no TIN is entered at the time the next invoice is issued, VAT will be charged until a valid TIN is entered.
Where VAT has been collected and remitted on previous invoices, as a valid TIN was not provided, Zoom will not adjust any VAT collected from you prior to a valid TIN being provided. This is on the basis that VAT was correctly charged based on the details available to Zoom at the time of invoicing.
Every customer is unique, and so are their specific tax circumstances. The above-stated information should not be considered as tax advice, but as a general overview of relevant tax rules. Zoom cannot provide you with tax advice for your individual situation, and therefore, we strongly recommend speaking with a professional tax advisor for tailored advice.