Pres. Bongbong Marcos Approves VAT on Foreign Digital Services
BONGBONG MARCOS – The President signed the law that seeks to impose VAT on foreign digital services including Netflix.
The taxes implemented among the Filipino people on the products and services they purchase are among the funds collected by the government for its operations. The Philippine government also implements tax deduction on certain income brackets of earning individuals.
In the Philippines, the tax-collecting body is the BIR or the Bureau of Internal Revenue. It is also the body that implements tax deductions on working individuals depending on their salaries. There are also laws that implement tax deductions over certain services. BIR also taxes social media influencers.
Recently, President Bongbong Marcos signed the Value Added Tax (VAT) on Digital Services. Based on an article on ABS-CBN News, the said law seeks to implement a 12% VAT on foreign digital services including streaming platforms.
Among those foreign digital service providers that will incur tax are movie-streaming platform Netflix and online marketplace Amazon. Facebook, Google, and other foreign tech firms are also subject to the rule set under the VAT on Digital Services Law signed by Pres. Bongbong Marcos.
Based on the report, the Department of Finance clarified that digital services include online marketplaces, media, search engines, advertising, and cloud services. Digital goods are also bound under the VAT law signed by the Chief Executive.
According to the DOF, the law is expected to generate Php 102.12 billion for the government from 2025 to 2028. However, on the other side, there are individuals who are concerned on the possibility that the implementation of VAT on digital services may also mean higher subscription fees.
Truth be told that countless Filipinos are using online platforms like Netflix, Google, and Facebook among many others. Meanwhile, Finance Secretary Ralph Rector and Senator Sherwin Gatchalian stressed that it is not a new tax but “merely correcting the current system that creates unfair advantage” for foreign digital service providers and places the local digital service providers at a disadvantage.
“Hindi tayo nagpapataw ng bagong buwis. Kokolektahin lang natin ang buwis na dapat naman talaga nating nakokolekta mula sa mga dayuhang digital service providers,” Recto said.
Based on the report, the new law signed by Pres. Bongbong Marcos exempts educational services like courses, webinars, and other platforms offering educational offerings.