President Ferdinand Marcos Jr. signed into law a measure imposing the 12% value-added tax (VAT) on nonresident digital service providers, such as Netflix, Amazon, and Shein.
“With this law, we say that ‘if your presence in the Philippine market is as real as your profits, then your tax responsibilities should also be equally tangible,'” Marcos said during the ceremonial signing of the law on Wednesday, October 2.
Marcos also clarified that this was not an imposition of a new tax, but just a way to streamline the BIR’s ability to collect VAT from digital services.
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Republic Act 12023 extends VAT to all digital services consumed in the Philippines, even if provided by companies without a physical presence in the country. This includes purchases from popular electronic marketplaces like Amazon, Shein, and Temu, and subscriptions to streaming services like Netflix and Disney+, which were previously not subject to VAT.
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The VAT imposed will be equal to 12% of gross receipts derived from the sale or exchange of services, including digital services, and the use or lease of properties.
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“This means our artists, filmmakers, musicians, the very people who fill our platform with stories and with content, will directly benefit. It ensures that our creative talents are not just surviving in a competitive digital market, but will be allowed to prosper,” Marcos said.
Is this a tax that domestic companies already had to pay, but foreign companies were exempt from? If so, then I wonder what took them so long.
Mega Corp lobbying would be my guess… Didn’t OECD implement this mid late 2010s?