Digital economy tax 'critical' as consumers shift to virtual channels: Dominguez

ABS-CBN News

Posted at May 22 2020 05:28 PM

MANILA - Finance Secretary Carlos Dominguez III said Friday tax for digital services such as e-commerce and video streaming platforms is "critical" as consumption turns digital in the new normal following the devastating coronavirus pandemic. 

Other Asian nations are also "seriously" considering tax for Netflix and other digital services to boost their COVID-19 war chests, Dominguez said in a statement.

Indonesia, for example, is already taking steps to bring digital economy into its tax base while Singapore and Malaysia already cover some services, he said.

Albay Rep. Joey Salceda earlier filed a bill proposing taxes on Netflix, Spotify, Facebook, Google and other global internet companies that do business in the Philippines, aiming to raise P29.1 billion in revenues.

"Ultimately, having a clear and efficient tax regime for the digital economy will be critical, as more and more taxable transactions shift from traditional means of doing business to more virtual avenues, a trend accelerated by COVID-19," Dominguez said.

"We are studying the bill of Ways and Means Chair Salceda very carefully and looking into what parts of the digital economy should be taxed," he added.

The government is looking into how to capture digital purchases into the VAT base and how to absorb profits generated by companies into the income tax system given their "transnational nature," Dominguez said.

The Philippines is the top social media user in the world according to the "Digital 2019: Global Digital Overview" by creative agency We Are Social. Filipinos spend an average of 10 hours and 2 minutes daily on the internet on any device, it said.

Netflix earlier said Filipinos spend "twice as much" time on the platform compared to the global average.

The coronavirus disease had caused economies around the world to contract, with governments forced to restrict movement, stop public transport and businesses for extended periods to prevent further spread of the contagious disease.