ALBAY 2nd district Rep. Joey Salceda, chair of the House Committee on Ways and Means and one of the country’s respected economists, is showing one and sundry that he is doing his work well when he discovered in his research and travels that among the member-countries of the Association of Southeast Asian Nations (Asean), only the Philippines is not taxing foreign or nonresident digital service providers.
Salceda has filed a bill imposing a digital services value-added tax (VAT) on these companies — such as Netflix and Spotify —and convinced his colleagues in the House to support his proposed measure. The measure will ride on the current popularity of entertainment based streaming services, among others, to raise funds for the government.
“We’re the only ones that do not (impose such a tax),” Salceda said, adding that if passed into law, the bill will redound to an estimated P19 billion increment to government revenues.
‘This is the kind of revenue-raising legislation that the nation needs, and not those that bear down on the poor and the middle class.’
The congressman said for the digital services VAT, “it will not be imposed on Filipino businesses. The emphasis is on foreign or non-resident digital service providers.”
During the plenary session of the House last Nov. 14, lawmakers overwhelmingly approved on third and final reading House Bill No. 4122, which aims to impose a 12 percent value-added tax on foreign digital service providers (DSP).
Deputy Speaker and Davao City 3rd district Rep. Isidro Ungab, who presided over Monday’s session, said 253 House members voted in favor of the bill. Only four voted in the negative, while one abstained.
The new VAT will be on the digital sale of services, including video-on-demand subscriptions; online advertisements and supply of other electronic services, which can be delivered through mobile applications; online marketplaces; and webcasts, among others.
Enactment of this bill will amend the National Internal Revenue Code of 1997 to include a section requiring foreign DSPs to collect and remit VAT for all transactions done via their platforms.
The bill also provides that five percent of the revenues from the VAT on DSPs would be set aside for the Creative Industries Development Fund.
This is the kind of revenue-raising legislation that the nation needs, and not those that bear down on the poor and the middle class.
