MANILA — Both the Senate and the House of Representatives have approved the consolidated bill approving the imposition of value added tax on digital services.

The House website said that the House ratified the bicameral conference committee report reconciling House Bill 4122  with Senate Bill 2528 on July 30, while the Senate ratified the same the day prior.

In asking his colleagues to approve the committee report, Senate Ways and Means Committee Chair Sherwin Gatchalian explained this primarily aims to clarify the VAT liability of nonresident digital service providers on the sale, exchange, or barter of digital services consumed in the Philippines; thereby reinforcing the BIR’s power to impose and collect VAT on digital services and transactions.

"One of the provisions of this reconciled version is the issuance of digital sales or commercial invoices with simplified requirements. To further strengthen compliance, the bill empowers the Commissioner of the BIR to block or suspend the services of providers who violate VAT provisions. Ito ay upang matiyak natin na walang lusot ang anumang uri ng paglabag sa batas, mapa-digital service providers man o traditional." 

Gatchalian said, "We are committed to paving the way for a level playing field. We believe in the importance of creating an environment where our digital service providers, whether they are nonresident or local, operate under fair and square tax policies."

Under the bill, digital services delivered by non-resident digital service providers shall be considered performed or rendered in the Philippines if the digital services are consumed in the Philippines. 

The digital service provider shall be liable for assessing, collecting, and remitting the value added tax. This shall cover online search engine, online market place or e-market place, cloud service, online media and advertising, online platform or digital goods. 

Online marketplaces or e-market places shall be liable to remit the value added tax on the transactions of non resident sellers that go through its platforms under certain conditions. It earmarks 5 percent of incremental revenues for the development of creative industries for 5 years after the bill becomes law.

The bill will be sent to President Ferdinand Marcos, Jr. for signature.