MANILA— Transactions below P500 should be exempted from the proposed 12 percent value-added tax on digital transactions in the spirit of fairness, Bangko Sentral ng Pilipinas Governor Benjamin Diokno said Friday.

In a televised briefing, Diokno said VAT is "a more efficient and less costly way of raising revenue" for the government.

Small firms whose gross sales is less than P3 million annually do not pay VAT but percentage tax instead, he said.

"It is in this spirit that I propose no VAT on small transactions, say less than P500 pesos. It is for equity reason," Diokno said.

"This is to align this to the proposal that in the case of QR payments involving small amounts, say less than P500, then there should be no fee. Fair and inclusive. It will also encourage the use of digital payments by the poor," he added.

The House of Representatives in September approved on final reading House Bill 7425, imposing a 12-percent value-added tax on digital transactions in the Philippines.

• House approves 12% VAT on digital transactions

The measure aims to level the playing field for both traditional and digital businesses after online channels saw a surge in usage during the COVID-19 pandemic.

The bill is pending approval at the Senate.

• Taxman in Philippines eyes digital realm of Netflix, Facebook
• Can't 'impose' on banks to waive online transfer fees as BSP tells consumers it's cost of 'convenience'
• PH officials warn public vs money launderers exploiting digital transactions

RELATED VIDEO:

Watch more in iWantv or TFC.tv