House panel OKs VAT for online goods, services

MANILA, Philippines — Netflix and Spotify subscribers as well as Amazon, Lazada and Shopee customers may soon have to pay more for these digital platforms’ products and services should the 12-percent value-added tax (VAT) approved by the House committee on ways and means becomes law after third reading in the House and Senate approval.

“We imposed no new taxes … In general, if you sell, you pay VAT, unless you fall under the exemptions for small businesses,” explained committee chair and Albay Rep. Joey Salceda. “If brick and mortar establishments, which are the hardest hit by the pandemic, have to pay VAT, the giants of e-commerce shouldn’t be exempt,” he added.

The tax measure covers digital subscription platforms such as those for video streaming (Netflix and Amazon Prime) and music streaming services (Spotify and Apple Music), as well as current online commerce platforms like Lazada, Shopee, Ebay and Carousel, and firms engaged in digital advertising that derive commissions from their services.

Small businesses, including those engaged in online selling whose sales are below P3 million will continue to be VAT exempt, Salceda said.

The new tax measure was seen to have minimal impact on consumers, with 77 percent of projected revenues seen to come from “upper to middle income families,” he said, adding that the tax would generate new revenues for COVID-19 response.