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Netflix and... Tax: VAT for Digital Transactions Hurdles House Panel

Tax revenue will help fund COVID-19 response.
by Clara Rosales
Jul 29, 2020
Photo/s: Pixabay

The House of Representatives' tax-writing committee on Wednesday approved a bill that seeks to impose a value added tax on digital transactions to help fund the government's COVID-19 response, as consumers under a four-month-long quarantine shop and stream to avoid goind outdoors.

The bill seeks to amend portions of the National Internal Revenue Code of 1997 to impose a 12-percent  VAT on online transactions. This means digital providers who service customers electronically will be required to collect and remit VAT.

According to the bill, a third party that acts as a conduit for goods or services offered by a supplier to a buyer, promotions platforms, and those hosting online auctions will be taxed. Suppliers of digital services in exchange for a regular fee, and suppliers of electronic and online services delivered via the internet will also be charged VAT.

The following digital services will also be taxed under the bill:

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  • Online licensing of software
  • Mobile applications
  • Video games
  • Webcast and webinars
  • Website filters and firewalls
  • Digital contents such as music, files, images, test and information
  • Online advertising platforms
  • Electronic marketplaces
  • Search engine services
  • Social network services
  • Database and website hosting
  • Online data warehousing
  • File sharing
  • Cloud storage services
  • Internet-based telecommunication
  • Online training
  • E-Learning
  • Online newspapers
  • Journal subscription
  • Payment proccessing

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House Ways and Means panel Chairman Joey Salceda, who is a co-author of the measure, earlier filed a bill seeking to impose VAT on online platforms Netflix, Spotify, Facebook, Google, and other global internet businesses operating in the Philippines.

During the deliberations, Salceda said the Philippines could see some P10-billion revenue from taxing online transactions.

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