Philippines approves taxes on digital transactions

On September 21, 2021, Philippine House of Representatives approved a proposal imposing a 12% tax on digital transactions in the country to generate new funding sources for the country's Covid-19 response efforts.

The Chamber passed Bill 7425 seeking to amend Section 105 of the National Internal Revenue Code (NIRC) by taxing digital service providers that operate through online platforms. The bill seeks to clarify the imposition of VAT on online advertisement services, digital services in exchange for a regular subscription fee, and supply of other electronic and online services that can be delivered through the Internet.

Albay Rep. Joey Salceda, a principal author of the bill, said foreign corporations selling digital services, such as Netflix, Spotify, and others, will have to pay for and impose VAT on their services. Digital services include online licensing or software, updates and add-ons, website filters and firewalls, mobile applications, video games and online games, and webcasts and webinars, Salceda said.
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