In a recently-held State of the Nation Address (SONA), Philippine President Ferdinand “Bongbong” Marcos, Jr. vowed to impose value-added tax (VAT) on digital transaction services. In response, a senator has just filed a bill embodying just that.

Filed by Sen. Pia Cayetano, Senate Bill 250 is asking for the modification of the National Internal Revenue Code of 1997 to impose a tax on the sales or exchange of any electronically-rendered services, equivalent to 12 percent of the gross receipts.

Per the bill, it defines “digital service” as any form of service that is transmitted over the internet or other electronic network and whose transmission can only be received with the use of information technology and can also be automated.

Encompassing a wide range of exchanges that take place digitally, said services include—online licensing, applications, webinars and webcasts, digital media, and even advertising platforms. It further extends to electronic marketplaces, social networks, search engine services, as well as databases and hosting.

Lastly, “digital service,” by definition, also covers the following—online training, internet-based communication, online publications, and payment processing services.

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