Diokno: Digital tax on services such as Netflix, Spotify is "only fair"

The finance secretary is considering taxes on digital transactions and streaming services such as Netflix and Spotify subscriptions.

File photo: A Netflix subscription on Huawei MatePad T 10s

To raise revenues through tax reform packages?

At a press briefing in Malacañang, Diokno announced that the department is seeking to put on a tax on digital goods and services to boost government revenues. Digital goods and services are acquired through e-commerce platforms and streaming services such as Netflix and Spotify. He added,

When you're buying from regular stores, you include tax. So, why not include a tax on digital goods and services?

Note that this is not the first time that the DOF secretary mulled over the idea of imposing a tax on digital items and services. Last year, Diokno gave a go signal putting a 12 percent VAT on digital transactions but with an exemption for amounts below PHP 500.

Moreover, the finance secretary also pointed out that online platforms can easily "evade" paying the appropriate taxes, unlike those with physical stores. 

He also explained that most of the users of e-commerce sites and audio and video streaming platform subscribers can afford to pay an extra fee since they are more well-off. Diokno stressed out,

I think in the sense of fairness, dapat magkaroon ng tax especially medyo, if you think about it, yung mga nakakaangat yung nakakakuha ng ganyan, yung digital payments.

A few months ago, the Department of Finance had sought to charge taxes for single-use plastics, cryptocurrencies, and VAT on digital services providers. 

According to the department's newly appointed secretary, these new taxes were "critical" so the government could generate PHP 349B in new revenues between 2023 and 2027. Allegedly the earnings will help curtail the country's ballooning debt.

In addition, Diokno announced that two more tax reform program packages were left to be implemented from the previous administration, which could "simplify a lot of the tax systems."

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What do you guys think?

Source: ABS-CBN