Marcos signs law imposing VAT on foreign digital services
President Ferdinand Marcos Jr. signed into law the measure seeking to impose a 12 percent value-added tax (VAT) on digital services provided by foreign firms, such as Netflix and Disney+.
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| File photo: Netflix |
New taxes?
The country's chief executive approved the Republic Act 12023 during a ceremonial signing at the Malacañang Palace.
The new law would cover digital media, digital music, digital video, video-on-demand, and digital advertising, according to Marcos.
Marcos maintained that the current administration was not charging new taxes, but making this move was meant to "simply strengthen the authority and streamline the process of the BIR (Bureau of Internal Revenue) to collect value-added tax on digital services."
Local businesses and international digital platforms now compete on equal terms. We no longer will be playing by different sets of rules. If you are reaping the rewards of a fruitful digital economy here, it is only right that you contribute also to its growth. After all, whether you are a small tech start-up or a global tech giant based halfway around the world, if you are making money here in the Philippines, you are part of our community. And with that comes a shared responsibility, he said.
Exempted from the law are digital educational services, including online courses and webinars offered by private institutions and the sale of online subscription-based services to educational institutions recognized by government agencies.
Among these institutions are the Department of Education, the Commission on Higher Education, and state universities and colleges.
The BIR also has the power to suspend business operations of those companies that failed to comply.
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