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Congress OKs 12% VAT on Netflix and other digital providers

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On its third and final reading, the PH Congress voted 167-6 with 1 abstention to approve House Bill No. 7425, which seeks to impose 12% value-added tax (VAT) on digital services like Netflix and Spotify.

The bill covers streaming platforms as well as other big digital service providers (DSPs) operating in the Philippines. It is also meant to revise the National Internal Revenue Code and give a fair playing field for both digital and traditional businesses.

DSPs are defined as “an entity which provides digital service or goods to a buyer through an online platform for purposes of buying and selling of goods or services or by making transactions for the provision of digital services on behalf of any person.”

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SEE ALSO: With 12% VAT, expect possible price hikes in Netflix, Spotify, and other popular digital services

Other things covered by House Bill No. 7425 are online advertisements, software licenses, mobile applications, online games, webinars, music, and more. 

Albay Rep. Joey Salceda says this is not a “new tax” implementation. Instead, it only closes the loopholes used by large foreign corporations. 

Once implemented, the lawmaker expects that it could raise around Php29.1 billion in annual revenues for the Philippines.

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