MANILA – President Ferdinand “Bongbong” Marcos Jr. signed into law a measure imposing value-added tax (VAT) on foreign digital services providers (DSPs).
Under the Republic Act (RA) 12023, 12 percent VAT on foreign DSPs, such as Netflix, Disney, and HBO, will be imposed in an aim to generate additional revenue for the government.
“If you are reaping the rewards of a fruitful digital economy here, it is only right that you contribute also to its growth,” the Chief Executive said during the signing ceremony at the Malacañang Palace.
He added: “Whether you are a small tech startup or a global tech giant based halfway around the world, if you are making money here in the Philippines, you’re a part of our community, and with that comes a shared responsibility.”
With the measure, which was one of the priority bills of the Marcos administration, about P105 billion in revenue is expected to be collected in the next five years.
“The amount is enough to build 42,000 classrooms, more than 6,000 rural health units, and 7,000 km of farm-to-market roads,” Marcos said. “Additionally, five percent of the revenues generated by the law will be allocated to the local creative industry.”
“This means our artists, filmmakers, musicians, the very people who fill our platforms with storage and the content, will directly benefit. It ensures that our creative talents are not just surviving in a competitive digital market, but will be allowed by fairness and progress,” he added.
Sen. Sherwin Gatchalian, who authored the law at the Senate, said the new measure is expected to address revenue losses by clarifying the taxability of non-resident digital service providers and addressing the ambiguity in the previous law.
“We believe in the importance of creating an environment where our digital services providers, whether they are nonresident or local, operate under fair and square tax policies,” Gatchalian said.
“Hindi tayo nagpapataw ng bagong buwis. Kokolektahin lang natin ang buwis na dapat naman talaga nating nakokolekta mula sa mga dayuhang digital service providers,” he added./PN
