Netflix, Facebook, Google tax? House committee OKs 12 percent VAT on digital transactions


Posted at Jul 29 2020 12:27 PM | Updated as of Jul 29 2020 02:59 PM

MANILA - The House Committee on Ways and Means on Wednesday approved a bill seeking to impose a 12 percent value added tax (VAT) on digital transactions, including non-resident or foreign service providers. 

Under the bill, VAT shall be imposed for online transactions including those that are "digital or electronic in nature" and those that render service "electronically."

The measure could generate P10.66 billion in revenues once enacted into law, Albay Rep. Joey Salceda, who chairs the committee said during the deliberations.

When asked whether services such as Netflix should be taxed under the measure, Salceda said "yes. Why should they be exempted.. when you buy canned goods you pay 12 percent [VAT]."

The bill defines digital services as "any service delivered or subscribed over the internet or other electronic network which cannot be obtained without the use of information technology." 

Digital services shall include: 

  • Online licensing of software
  • Mobile Applications
  • Video Games
  • Webcast and webinars
  • Digital contents such as music, files, images, test and information
  • Advertisement platform
  • Electronic marketplaces
  • Search engine services
  • Social network services
  • Database and website hosting
  • Online data warehousing
  • File sharing
  • Cloud storage services
  • Internet-based telecommunication
  • Online training
  • E-Learning
  • Online newspapers
  • Journal subscription
  • Payment proccessing

It amended several sections of the National Internal Revenue Code of 1997 to impose taxes on transactions done online. The approved version is the substitute bill for several others filed by lawmakers.

Salceda earlier filed a bill seeking to impose VAT on Netflix, Spotify, Facebook, Google and other global internet companies that do business in the Philippines.

Finance Secretary Carlos Dominguez III earlier said 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. 



--with reports from Zandro Ochona and RG Cruz, ABS-CBN News