House panel approves tax bill on digital services
The House Ways and Means panel has recently approved the bill seeking to add 12% VAT on foreign and local companies offering goods and services on digital platforms.
The substitute bill, which is still unnumbered, aims to amend the Section 105-A of the National Internal Revenue and add a provision that putting the responsibility on international digital service providers such as Netflix, Spotify, and Lazada to assess, collect, and remit 12% VAT on all their successful transactions. It was authored by Albay Representative and House Ways and Means Chairman Joey Salceda along with House Deputy Speaker Sharon Garin.
By the definition from the bill, a digital service provider refers to “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.”
Digital service providers also pertain to the following:
- a third party that acts as a conduit for goods or services offered by a supplier to a buyer and receives commission therefore;
- a platform provider for a promotion that uses the internet to deliver marketing messages to attract buyers;
- a host of online auctions conducted through the internet, where the seller sells the product or service to the person who bids the highest price;
- a supplier of digital services to a buyer in exchange for a regular subscription fee over the usage of the 13 said product or service; and
- a supplier of electronic and online services that can 15 be delivered through an information technology 16 infrastructure, such as the internet.
“Digital service providers from outside [the country] gain profit from our constituents but they don’t pay tax [to Philippine government]. This bill levels the playing field for local digital service providers,” Deputy Speaker Sharon Garin shared to GMA News.