Philippines hauls in PHP 7 billion from new digital services VAT

The tax is imposed on nonresident digital platforms, including popular services such as Netflix.

File photo: Netflix on a tablet

A possible growth driver for PH

The Philippine government has collected nearly PHP7 billion from the 12 percent value-added tax (VAT) implemented on digital services, according to the Department of Finance.

The tax is imposed on nonresident digital platforms, including popular services such as Netflix, Spotify, Amazon, and Lazada, bringing their operations under the Philippine tax net.

Data from the Bureau of Internal Revenue (BIR) shows that a total of PHP 6.57 billion has been raised since the digital VAT took effect in June.

This intake comes at a time when overall revenue collections have been challenged by slower economic growth and an ongoing corruption probe.

A breakdown of the collection figures reveals that PHP 2.78 billion was collected directly from nonresident digital service providers as of October 23.

The largest portion, however, came from final withholding VAT on business-to-business (B2B) transactions, which reached PHP 3.79 billion as of September 25.

This latter figure was almost entirely remitted by private withholding agents, with a small portion coming from government agencies.

Former BIR Commissioner Romeo D. Lumagui, Jr. had previously projected a PHP 10 billion collection from the digital VAT this year, a target well above the initial PHP 3.62 billion goal.

Looking ahead, the Marcos administration is banking on this sector for sustained growth, targeting PHP 21.37 billion in digital VAT revenue for 2026.

Via: BusinessWorld