House approves 12% tax for DSPs
The House of Representatives of the Philippines approved a bill that would impose a 12% Value-Added Tax (VAT) on digital transactions in the country, potentially affecting global tech giants such as Facebook, Netflix, and Google, among others.
House Bill No. 7425 is set to amend sections in the National Internal Revenue Code of 1997 that would require foreign Digital Service Providers (DSPs) to collect and remit VAT for all transactions in their platforms.
Books and other printed materials, online courses, and webinars that are sold online or accredited by private schools are exempted from the tax.
Meanwhile, non-resident DSPs would be required to register for VAT if their gross sales have exceeded P3 million (approximately US$59,500) and registered non-resident DSPs providing services to the government would pay a lower VAT at 5%.
If put into law, initial estimates from the Department of Finance (DOF) said that the proposed tax will generate P10.66 billion (approximately US$211 million) in government revenues annually.
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