Netflix backs VAT on digital transactions, DOF says

Video on-demand streaming service provider Netflix backs the value-added tax (VAT) bill on digital transactions that involves foreign players, from which the Department of Finance (DOF) expects to collect P20 billion in 2025.

“Netflix shared their eagerness for the bill’s implementation and committed to collaborating with the government to achieve mutually beneficial outcomes,” the DOF said in a statement on Wednesday.

Finance Secretary Ralph Recto told Inquirer that he expects to generate from the tax law revenues amounting to “roughly P20 billion” next year.

Last June 27, the Senate and the House of Representatives approved a reconciled version of the proposed VAT on Non-resident Digital Service Providers Act.

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This version involves House Bill No. 4122 and Senate Bill No. 2528 and seeks to impose a 12-percent VAT on digital transactions on companies such as Netflix, Disney and HBO.

The proposed law defines digital services as those that are supplied over the internet or other electronic networks with the use of information technology and where the supply of the service is essentially automated.

These services include but are not limited to online search engines, online marketplaces, cloud services, online media and advertising, online platforms, and digital goods.

On Tuesday, the DOF met with representatives of Netflix to discuss the proposed law. Representatives from Netflix include indirect tax senior manager Davy Chen and public policy manager for Southeast Asia Shangari Kiruppalini.