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Additional tax on digital services proposed by Rep. Joey Salceda and Sen. Bong Revilla

Additional-tax-digital-services-Salceda-Revilla

Can you imagine paying more taxes for your favorite video and music streaming platforms, an extra fee for social media sites, or additional tax for online shopping websites?

As part of the government’s massive effort to fund their infrastructure programs, fight against the national health emergency, and give more financial assistance to the poorest of the poor, Hous committee chair and Albay Rep. Joey Salceda is pushing the Lower House of the Congress for the so-called ‘entertainment business tax’ to bring more revenue for the government.

According to Salceda’s statement via Inquirer, new taxes that will be imposed in various digital platforms is not something new as the United States and its territories have implemented for the last several years.

Netflix, Facebook ads, and Lazada, for example, will be obligated to pay an additional 12% value-added tax (VAT) which is similar to how regular businesses do it in their respective industries. This is expected to be added in the current pricing of recurring subscription plans.

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Lazada merchants who are not responsible for paying taxes will be obliged to do so in the proposed measure as only 50% of shops from the platform are legit and registered to the Bureau of Internal Revenue (BIR). These small businesses escape accountability as they do not fully declare their earnings making them exempted from rendering taxes.

Currently, the subscription fees of Netflix basic, standard, or premium plans doesn’t cover any tax. This means that if the ‘Netflix tax’ will be implemented on their current plans, expect an additional Php30 to Php50 increase from what you are currently paying. It’s the same for other platforms as there will now be Facebook ads tax, Lazada tax, etc.

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Salceda has used the taxation model by Paul Romer, who won a Nobel Prize last 2018.

In addition, it will accredit all shops from the e-commerce platforms to be government-registered businesses making them compliant to whatever the government is imposing whether it’s for a big or a small corporation.

Consequently, Salceda has forecasted that the measure will bring an additional Php30 billion worth of revenue to the government once it passes as a law.

This means that the government can now block or prohibit a specific app, website, or any platform to be active and used by the public if they don’t comply with the foregoing laws of taxation. It aims to aid the congress’s recovery plan entitled ‘PH-Progreso’ which targets to raise a Php160 billion worth fund for the country’s economy for the next four to nine years.

Earlier today, Senator Bong Revilla filed a new Senate resolution tackling the additional tax on digital services.

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