House Bill 4122, which aims to impost value-added tax (VAT) on Netflix and other digital transactions, is close to becoming a law as it was approved on the third reading last November 14.
This new law wants to impose a 5 percent VAT on non-resident digital service providers, while the others will get 12 percent. These are companies that conduct the electronic and digital business of electronic or digital in nature.
According to one of the authors, Rep. Alfred Delos Santos of Ang Probinsyano party list, the new tax law would add an assurance that government programs and projects will be completed as more funds become available.
The lawmaker added that once the bill has been approved by the Senate, it could take effect next year and could help address the priorities for the 2023 national budget. Another goal of the law is to level the playing field by not exempting digital service providers from the VAT.
Those who will be taxed are services like subscription-based online streaming services that are offered by companies like Netflix, online advertisements, and others. However, online seminars and other services related to education will be exempted.
The bill also required digital service providers to register for VAT if the gross sales for the previous year exceeded Php3 million. They are also required to have a representative office or agent that has to be a resident corporation under Philippine law.