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Philippines Moots Digital Tax

by Mary Swire,, Hong Kong

28 May 2020

A proposal has been put forward for a digital services tax regime in the Philippines.

The state-run news agency PNA reported that Joey Salceda, the chairman of the House Committee on Ways and Means, has tabled a bill to establish a fiscal regime for the digital economy.

According to Salceda, "When you're a network in the Philippines, advertising services paid to you will be subject to VAT. But Google and Facebook are not subject to VAT for advertising."

The PNA reported that Salceda's proposal aims to fairly capture the value created within the tax system. It would make "network orchestrators" such as Grab and Angkas withholding agents for income taxes, while network orchestrators for lease services and electronic commerce platforms would be made withholding agents for VAT.

The legislation would clarify that services rendered electronically in the course of trade or business are liable to VAT. It would also clarify that digital advertising by platforms such as Google or Facebook, along with subscription-based services like Netflix and Spotify, are subject to VAT. Those who provide digital services would be required to do so through a resident agent or a representative office in the Philippines.

TAGS: compliance | tax | business | value added tax (VAT) | tax compliance | commerce | Philippines | internet | legislation | transfer pricing | tax reform | services | BEPS

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