Steam has officially started collecting a 12% value-added tax (VAT) on all digital purchases in the Philippines as of June 1, 2025. This move follows the enactment of Republic Act 12023, known as the VAT on Digital Services Law, which expanded the country’s tax code to cover foreign and local digital platforms. For Filipino gamers, the good news is that Steam has integrated the VAT into listed prices—so no extra charge at checkout. For example, a game listed at ₱1,000 already includes the ₱120 VAT. Under this system, Steam handles the tax collection and remittance for developers and publishers, sparing consumers from having to calculate it themselves.
While prices for many major titles—such as Grand Theft Auto V, The Witcher 3, and Elden Ring—remain unchanged for now, developers and publishers feel the pinch. Since Steam’s platform fee still applies, the 12% VAT cuts directly into their revenue share. Smaller indie studios, in particular, face tighter margins, as development costs continue to rise. Industry observers anticipate that some studios may eventually adjust Philippine price points upward to offset these new expenses, though an immediate price hike has not yet occurred.
The 12% VAT on digital services aims to level the playing field between local businesses already remitting VAT to the Bureau of Internal Revenue (BIR) and international digital platforms earning revenue from Filipino consumers. Beyond Steam, this law affects streaming services like Netflix and Spotify, e-commerce sites such as Lazada, and other platforms including Amazon and Disney+. Section 3 of Revenue Regulations No. 003-2025, issued by the BIR in January 2025, provided the implementing rules: any nonresident digital service provider with over ₱3 million in annual Philippine receipts must register with the BIR, collect VAT on gross receipts, and appoint a local representative for compliance.
From the consumer perspective, incorporating VAT into displayed prices avoids surprises at checkout. Filipino gamers can continue purchasing their favorite titles without manually adding extra fees. Yet, from the developer and publisher standpoint, absorbing 12% VAT on every sale—and still paying Steam’s usual 30% commission—eats into potential profits. As a result, studios may have to reevaluate pricing strategies for future releases in the region. Some devs have already voiced concerns on forums, calling the law a “double hit” that comes at a tough time as production costs soar.
Looking ahead, the BIR expects digital VAT to generate roughly ₱7.25 billion in 2025—part of an estimated ₱105 billion over five years—funds that will help modernize tax infrastructure and support local creative industries. Five percent of that revenue is earmarked for grants to Filipino artists, musicians, and game developers—a small consolation for studios now shouldering the cost of compliance. Meanwhile, consumers will likely see minimal disruption in the short term, but vigilant players and devs will be watching closely for any gradual price adjustments on their favorite titles.
