Taxation of cross-border services clarified

Taxation of Cross-Border Services A Clear Call to Action

As professionals in the street performing industry, we understand the impor
importance of navigating the complex world of taxation when it comes to cro
cross-border services. The recent clarification from the Bureau of Internal
Internal Revenue (BIR) on March 30, 2026, regarding the proper application 
of Revenue Memorandum Circulars (RMC) 5-2024 and 38-2024 is a welcome devel
development for taxpayers and revenue officers alike.

Addressing Uncertainty

In this blog post, we will present a clear stance on the taxation of cross-
cross-border services, supported by logical arguments and addressing potent
potential counterarguments to provide a comprehensive understanding of the 
issue at hand. For too long, uncertainty has surrounded this topic, and it 
is time for clarity and consistency.

The Clarification A Step in the Right Direction

RMC 24-2026 provides much-needed clarity on the taxation situs of income fr
from services, acknowledging that the place where the service is performed 
or completed can be considered as the source of income. This approach is co
consistent with Article 1233 of the New Civil Code, which provides that an 
obligation is deemed performed when the service constituting the obligation
obligation has been completely delivered or rendered.

A Checklist for Revenue Officers

The circular also prescribes a checklist that revenue examiners must accomp
accomplish and include in the audit docket case. This checklist serves as a
a valuable tool in determining the source of income from cross-border servi
services, ensuring that taxpayers are treated fairly and consistently.

Rebutting Potential Counterarguments

Some may argue that the Aces case doctrine expands the law, allowing for th
the taxation of income from services performed outside the Philippines. How
However, we disagree with this notion as it goes against the Supreme Court'
Court's interpretation of the law. The Aces case simply applied the place o
of performance test to determine the source of income.

Others may suggest that the benefits received theory has no basis in our 
Tax Code. We strongly disagree, as the services rendered by a non-resident 
service provider necessarily benefit the Philippine party and result in act
actual payment or accrual, constituting economic wealth for the non-residen
non-resident service provider.

Conclusion A Call to Action

In conclusion, we believe that RMC 24-2026 is a step in the right direction
direction towards providing clarity on the taxation of cross-border service
services. We urge taxpayers and revenue officers to work together to ensure
ensure fair and consistent treatment. As Euney Marie J. Mata-Perez, a CPA-l
CPA-lawyer and managing partner of Mata-Perez, Tamayo & Francisco (MTF Coun
Counsel), aptly states The services rendered by a non-resident service pr
provider will necessarily benefit the Philippine party; otherwise, the Phil
Philippine party will not engage the services.

Let us work together to create a more transparent and predictable tax envir
environment for cross-border services.

Keywords Taxation of cross-border services, Revenue Memorandum Circula
Circulars (RMC) 5-2024 and 38-2024, Aces case doctrine, Bureau of Internal 
Revenue (BIR), Philippines

SEO Optimization

Title Taxation of Cross-Border Services A Clear Call to Action
Meta Description Discover the latest updates on the taxation of cross-bo
cross-border services in the Philippines. Learn how RMC 24-2026 clarifies t
the proper application of RMCs 5-2024 and 38-2024.
* Header Tags
+ H1 Taxation of Cross-Border Services A Clear Call to Action
+ H2 The Clarification A Step in the Right Direction
+ H2 Potential Counterarguments A Rebuttal
+ H2 Conclusion A Call to Action

Edward Lance Arellano Lorilla

CEO / Co-Founder

Enjoy the little things in life. For one day, you may look back and realize they were the big things. Many of life's failures are people who did not realize how close they were to success when they gave up.