VAT to be imposed on digital transactions


The bill seeking to impose value-added tax (VAT) on digital transactions such as Netflix and Spotify has been approved by the House of Representatives on Tuesday.


QUEZON CITY — House Bill No. 7425 was approved by the lower chamber with 167 lawmakers voting in favor. Six voted in opposition, and one abstained. The bill seeks to amend the National Internal
Revenue Code of 1997.

Under the bill, digital service providers (DSPs) shall collect and remit VAT on transactions that go through its platform. The VAT imposed is at 12 percent.

The imposed value-added tax covers

Electronic or digital sale of services such as:
 Online advertisement services and provision for digital advertising space
 Digital services in exchange for a regular subscription fee such as Netflix and Spotify
 Supply of other electronic and online services that can be delivered through the internet

Licensing of:
 Software, updates, and add-ons, west filters and firewalls
 Mobile applications, video games, and online games
 Webcast and webinars
 Provision of digital content such as music, files, images, text and information.

Other services:
 Search engine services
 Social networks
 Internet-based telecommunication
 Online training such as the provision of distance learning, e-learning, online courses and webinars
 Online newspapers and journal subscription
 Ad payment processing services

According to Gabriela Women’s Party Representative Arlene Brosas, meanwhile, a 12 percent value-added tax is the highest digital tax in the ASEAN region. The congresswoman did not vote for the measure and said that consumers would end up shouldering the VAT

She said the measure will hit subscription platforms that Filipinos have used for entertainment, self-learning, and research amid the ongoing health crisis. (HMP/Headline PH)


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