Bill seeking to impose VAT on digital transactions filed

Vivienne Gulla, ABS-CBN News

Posted at Aug 04 2022 07:09 PM

MANILA — A bill seeking to impose value-added tax (VAT) on digital transactions has been filed at the Senate.

Senate Bill 250, filed by Sen. Pia Cayetano, proposes amendments to the National Internal Revenue Code of 1997, to levy a VAT equivalent to 12 percent of gross receipts on the sale or exchange of services rendered electronically.

The measure considers as "digital service" any service delivered or subscribed over the internet or other electronic network, which cannot be obtained without the use of information technology and where the delivery of the service may be automated. 

These include online licensing of software, updates, and add-ons, website 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; and, advertisement platform such as provision of online advertising space on intangible media platform.

It also includes online platform such as electronic marketplaces or networks for the sale, display, and comparison of prices of trade products or services; search engine services; social networks; database and hosting such as website hosting, online data warehousing, file sharing and cloud storage services.

Internet-based telecommunication; online training such as provision of distance teaching, e-learning, online courses and webinars; online newspapers and journal subscription; and payment processing services are also covered.

“As the country moves towards digitalization, so too must our tax regime. The government needs to catch up with the trends and constantly expend an all-out effort to strengthen its revenue-generating capability to aid our country’s economic recovery from the adverse impacts of COVID-19,” Cayetano said.

“This bill, which was based on the measure transmitted by the House of Representatives to the Senate in the 18th Congress, aims to level the playing field between traditional and digital businesses by clarifying the imposition and collection of value added tax (VAT) from digital service providers, which are required to help government monitor and collect VAT from persons engaging businesses on their digital platforms,” she added.

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