December 9, 2022

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Tech firms seek PHL digital tax in line with international norms

2 min read

TECH INDUSTRY associations said the Philippines should align its digital taxation policy with international practice, saying that predictability of business conditions is key to continued investment in innovation.

The Asia Internet Coalition (AIC) and the Asia Cloud Computing Association (ACCA) said they support a proposed measure imposing value-added tax (VAT) on digital transactions, but proposed provisions for single group registration of related companies and the removal of a requirement to appoint an in-country representative.

The House of Representatives approved on third reading on Nov. 14 House Bill 4122, which seeks to impose 12% VAT on non-resident digital service providers such as Spotify and Netflix. Senator Pilar Juliana S. Cayetano has filed Senate Bill 250 as the other chamber’s counterpart measure.

If the measure becomes law, 12% VAT will also be imposed on the digital sale of services like online advertising and the supply of other services delivered through online marketplaces, webcasts and mobile applications. Albay Rep. Jose Ma. Clemente S. Salceda, who chairs the House ways and means committee, said the measure is expected to generate P19 billion in revenue.

In a Nov. 23 letter to Sen. Sherwin T. Gatchalian, chairman of the Senate committee on ways and means, the groups said: “We earnestly request your leadership in aligning the proposed digital taxation policy with international norms espoused by the Organisation for Economic Cooperation and Development (OECD) and the International Monetary Fund (IMF).”

Legislators should frame the tax on digital transactions as a “simplified electronically supplied services (ESS) VAT regime that conforms with the recommendations of the international organizations for extraterritorial VAT compliance and successfully implemented in many countries,” they added. The letter which was sent to reporters on Thursday.

They argued that the ESS VAT regime has been adopted by countries in the region such as…


2022-11-24 07:32:34

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