Philippines Parliamentary Committee Approves Tax On Text Messages

by Mary Swire, Tax-News.com, Hong Kong

10 September 2009

The Philippine House of Representatives’ Committee on Ways and Means has approved a bill which would levy an excise tax on text messages.

The excise tax would be PHP0.05 on every short message service (SMS) and multimedia message service (MMS) sent from mobile phones in the Philippines.

The additional revenue that would be gathered as a result of the proposed measure has been estimated at up to PHP36bn (USD750m), according to reports.

Although the country's telecommunication companies were expected to absorb the increased cost represented by the tax within their businesses, there was no proviso within the bill that this should occur, as the originators of the legislation had initially wished.

There has therefore been some concern that the approximately 70m mobile phone subscribers in the country would end up shouldering the increased tax burden.

The bill also approved the purchase and installation of an electronic metering device to link the National Telecommunications Commission, the Bureau of Internal Revenue and the telecommunication companies, in order to monitor their revenue and assess the tax due.

The bill must now be submitted to the House for approval on its second reading, but reports in the national media have suggested that a final agreement is unlikely in either the House or the Senate, if a possibility of the tax being passed on to the customer remains.

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