House Approves Bill Imposing VAT On Digital Transactions On Final Reading

House approved on final reading the bill imposing VAT on digital transactions.

On Tuesday, the House of Representatives approved on final reading the bill imposing value-added tax (VAT) on digital transactions — including streaming platforms such as Spotify and Netflix.

digital transactions
Photo source: Vapulus

With 167 affirmative, 1 abstained, and 6 negative votes, House Bill 7425 was approved on final reading. The said measure will then be sent to the Senate for its approval.

Under the said bill, digital service providers shall collect and remit a VAT (value-added tax) on transactions that went through their platform. The VAT imposed in the country was at 12%.

The value-added tax imposed covered electronic or digital sale of services such as digital services in exchange for a regular subscription fee such as Spotify and Netflix, online advertisement services and provision for digital advertising space, and supply of other electronic and online services that can be delivered via the internet.

Manila Bulletin reported that the said bill consolidated legislative proposals filed by Deputy Speaker Rep. Vilma Santos-Recto; Deputy Speaker Rep. Deogracias Victor Savellano (1st District, Ilocos Sur); and Reps. Sharon Garin (AAMBIS-OWA) and Joey Sarte Salceda (2nd District, Albay).

Rep. Santos-Recto’s bill sought exemption of books, magazines, newspapers, journals, and other educational or learning materials published in digital electronic format from value-added tax.

On the other hand, Savellano’s House Resolution 685 was included in the said bill although the measure merely sought a legislative inquiry in determining whether or not online firms such as Lazada, Shopee, Grab, Angkas, Surplus, Air BNB, and similar firms pay value-added tax.

READ ALSO: Albay Rep. Joey Salceda Wants Additional Tax On Digital Services

According to a report on Manila Bulletin, 6 members of the Makabayan bloc rejected the said bill as they protested its passage amidst the continued economic devastation of the pandemic.

Asst. Minority Leader Arlene Brosas (Gabriela Partylist), who voted against the said bill, said that the 12% value-added tax would be the highest digital tax in the ASEAN region and consumers would shoulder the value-added tax.

Tatamaan sa panukalang ito ang streaming services tulad ng Netflix at Spotify – mga platforms na tanging libangan ng maraming Pilipino sa ilalim ng pandemya. Magmamahal din ang subscription fees ng premium accounts sa mga applications na pantulong sa pag-aaral ng mga bata tulad ng Canva at subscription-based journals na reference ng mga mag-aaral sa kolehiyo,” Brosas said.

Senior Deputy Minority Leader Carlos Isagani Zarate (Bayan Muna), who also voted against the said bill, said that imposing a value-added tax on digital services was like adding insult to injury as he noted that the government had allegedly miserably failed in its pandemic response.

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