House passes another tax on your simple pleasures

MANILA, Philippines — If, like most Filipinos, you’ve been escaping the aggravations of life in the islands by listening to good music, watching the latest movies or reading enlightening books from abroad, prepare to pay more for those simple pleasures, thanks to our congressmen.

Voting 167-6-1, the House of Representatives has approved on final reading a bill that imposes a 12-percent value-added tax (VAT) on digital transactions in the Philippines, like streaming platforms Netflix and Spotify, or book vendors like Amazon.

Only the six Makabayan lawmakers from Bayan Muna, Gabriela, ACT Teachers and Kabataan opposed the bill.

The bill defines a digital service provider as “a service provider of a digital service or good to a buyer, through operating 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.”

The proposed measure seeks “to level the playing field between traditional and digital businesses” by clarifying the imposition of VAT on digital service providers.

The 12-percent VAT covers online advertising services, digital services in exchange for a regular subscription fee such as Netflix and Spotify and supply of other electronic and online services that can be delivered through the internet.

Highest in Southeast Asia

The measure requires nonresident digital service providers (DSPs) to collect and remit the VAT on the transactions that pass through its platform.

The bill imposes a 5-percent VAT on registered but nonresident DSPs providing services to the government, otherwise a 12-percent VAT is imposed.

The bill, according to lawmakers, is seen to generate new revenue sources to fund the government’s COVID-19 response.

Gabriela Rep. Arlene Brosas, who opposed the bill, said the 12-percent VAT would be the highest digital tax in Southeast Asia, adding that the VAT would be passed on to the consumers.

“This bill will hit streaming services like Netflix and Spotify, which are the only source of entertainment for many Filipinos during the pandemic,” Brosas said.

She added that subscription fees for premium accounts of applications such as Canva and other subscription-based journals that are helpful to students would also increase.