The House of Representatives has approved House Bill No. 7425, which seeks to collect 12% value-added tax (VAT) on digital services like Netflix and Spotify.
Around 167 lawmakers voted for the bill to pass with six against and one abstained. The bill covers the digital sale of goods and services delivered online and via the Internet, including streaming platforms, online and digital advertisements, and more.
VAT is also going to be implemented on mobile apps, video games, online games, digital content services (like YouTube, Netflix, and Spotify), and other online subscription services.
According to Gabriela Women’s Party Rep. Arlene Brosas, who voted against the bill, 12% VAT is the highest in the ASEAN region. She added that it is highly likely consumers will shoulder the said VAT as well.
Rep. Brosas also said streaming services like Netflix and Spotify, platforms considered the only source of entertainment by many Filipinos during the pandemic, will be hit, thereby increasing their subscription fees. Online services used for school are also going to be affected.
Albay Rep. Joey Salceda says the amendment seeks to cover loopholes used by foreign corporations to get around paying taxes for services it offers to Philippine consumers.
The pandemic (along with the improvement of Internet services in the country) has propelled the usage of digital services such as Netflix and Spotify in the country.
With the VAT implementation, the government looks to earn Php 10 billion from the taxation — which is around Php 9 billion from foreign companies and Php 1 billion from local businesses.