The Philippines, with its rapidly expanding digital economy, has become an attractive destination for foreign e-commerce SMEs looking to tap into new markets. One of the most important legal developments affecting online business operations is the Internet Transactions Act (ITA) of 2023 and its Implementing Rules and Regulations (IRR).
This guide breaks down the key aspects of the ITA, with a focus on its impact on foreign e-commerce companies exploring or already operating in the Philippine market.
Overview of the Internet Transactions Act (ITA)
The ITA was enacted to enhance consumer protection, promote fair competition, and boost the country’s digital economy by establishing a legal framework for online transactions. It regulates business activities conducted over the internet, ensuring that both consumers and merchants can engage in safe, secure, and transparent e-commerce.
How the ITA Applies to Foreign E-Commerce SMEs
Scope
The ITA applies to business-to-business (B2B) and business-to-consumer (B2C) internet transactions, as long as at least one of the parties involved is located in the Philippines. It excludes online media content and purely personal, non-commercial consumer-to-consumer transactions.
The ITA governs the following types of participants in internet transactions:
- Digital platforms – tech-enabled mechanisms that connect users and providers, such as e-marketplaces, mobile apps, online delivery and travel platforms, and even social media channels offering commercial features.
- E-marketplaces – platforms that connect online consumers and merchants, handle payments and shipping, and retain oversight of the transaction.
- E-retailers – businesses that sell goods or services directly via their own websites or apps.
- Online merchants – those who sell non-financial goods or services through third-party digital platforms.
- Online consumers – individuals in the Philippines who pay to purchase, lease, or subscribe to goods or services over the internet.
Extraterritoriality
A key aspect of the ITA is its extraterritorial reach. It covers any B2B or B2C e-commerce transactions (whether for digital or physical goods/services) where:
- At least one party is located in the Philippines, or
- The platform is availing of the Philippine market or has minimum contacts with the country
According to the IRR:
- “Availing of the Philippine market” includes activities such as targeting ads to Philippine users, receiving orders from the Philippines, delivering there, or offering customer support locally.
- “Minimum contacts” occur when users in the Philippines can access and interact with your platform, regardless of where your company is based.
This means that foreign companies can be subject to the ITA even without a physical presence in the Philippines.
Key Compliance Obligations
Obligations for E-marketplaces
E-marketplaces must:
- Clearly identify and label e-commerce transactions
- Disclose information about merchants and products
- Vet and register all merchants (local and foreign), including collection of business documentation and contact details
- Ensure that goods sold comply with relevant Philippine laws
- Maintain an accessible and effective complaint resolution system
- Safeguard the privacy of consumer data
Obligations for Other Digital Platforms (not e-marketplaces)
All digital platforms—regardless of whether they facilitate transactions—must:
- Help consumers distinguish between business and personal accounts
- Comply with applicable laws for product listings and transactions
- Clearly identify goods and sellers
- Maintain updated merchant records
- Handle consumer complaints effectively
- Ensure consumer data protection
Obligations for E-retailers and Online Merchants
These sellers must:
- Display full pricing (including extra costs like delivery fees)
- Deliver products/services as promised and described
- Provide business identifiers, such as trade name, contact details, and address
- Issue receipts or invoices (paper or electronic) for every transaction
- Operate a reliable complaint-handling mechanism
Final Thoughts
As the Philippines strengthens its digital infrastructure and consumer protection standards, the Internet Transactions Act (ITA) of 2023 represents a turning point in the country’s regulatory approach to e-commerce. For foreign SMEs—especially those in online retail, marketplaces, or digital platforms—understanding and complying with the ITA is essential for sustainable and risk-free market participation.
Even companies without a local presence may fall under the ITA’s jurisdiction due to the law’s extraterritorial provisions, which apply to any platform engaging with the Philippine market through sales, support, or marketing.
To prepare for compliance and reduce risk:
- Assess your exposure: Determine if your activities fall under “availing of the market” or “minimum contacts” criteria
- Update your internal policies: Align with ITA standards for merchant registration, data privacy, product compliance, and customer service
- Stay informed: Follow updates from the Department of Trade and Industry (DTI), which oversees implementation through the newly created E-Commerce Bureau
- Get legal advice: Trustiics connects foreign SMEs with vetted Philippine lawyers who can help review your operations, policies, and risk exposure
Whether you’re entering the market for the first time or scaling existing digital operations, proactive compliance with the ITA will protect your business and position you to take full advantage of growth opportunities in one of Southeast Asia’s most promising digital economies.