The Philippines aims to level the playing field with domestic brick-and-mortar players. To achieve this, the country will impose a 12% value-added tax (VAT) on digital services provided by tech giants like Amazon, Netflix, Disney, and Alphabet. This announcement was made on Thursday by the internal revenue agency.
The imposition of VAT on non-resident digital service providers, including streaming services and online search engines, was signed into law by President Ferdinand Marcos Jr. on Wednesday.
This will encourage firms who earn from customers here in the Philippines to compete fairly. According to a statement from Romeo Lumagui, commissioner of the Bureau of Internal Revenue, a level playing field produces better goods and services.
According to the agency, only domestic digital service providers are now required to pay the 12% VAT.
An email from a business representative for Asia-Pacific stated that Netflix does not currently have a comment to share. Requests for response from Disney, Google, and Amazon were not answered.
Between 2025 and 2029, the government hopes to recoup 105 billion pesos ($1.9 billion) from VAT. According to the presidential communications office, it intends to set aside 5% of this income to support initiatives for the Philippine creative industries.
The agency further stated that services in the public interest and education will not be subject to VAT.
According to the revenue agency, digital services offered in the Philippines by international companies are deemed to have been consumed in the country of Southeast Asia.
Tech companies have seen increased use in Southeast Asia since the pandemic, but they also have to deal with more onerous fiscal tax laws.
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