Tuesday, March 5, 2024

Gov’t readying plan to slap VAT on Netflix, digital services

The Department of Finance (DOF) is studying how to collect value-added tax (VAT) from local and cross-border digital transactions parallel to its neighbors in Southeast Asia.

DOF secretary Carlos Dominguez III (Photo from PIA)

This, as the US is reportedly investigating the digital services tax of the European Union (EU), Britain, Turkey, Indonesia, and India as these are allegedly targeted against US firms such as Google, Apple, Facebook, Amazon, and Netflix.

DOF secretary Carlos Dominguez told journalists in a Viber message on Wednesday, June 3, that they are aware that some countries have started to slap digital services tax despite the lack of agreement “on how to reallocate income taxation rights on cross-border digital transactions.”

“We are constantly monitoring developments on this matter. Once an international agreement is reached, we will immediately study and propose tax reforms to capture income tax on cross-border digital transactions,” Dominguez said.

He noted they are currently concentrating on how to collect VAT from both local and cross-border digital transactions, “which is similar to what the other Asean countries are doing.”

Both the DOF and the Bureau of Internal Revenue (BIR) “are currently crafting regulations and designing a system to effectively collect VAT on digital transactions to help the government raise revenues,” Dominguez said.

“In this regard, while we are now focusing on administrative regulations, we still welcome Congressman Salceda’s proposed bill on digital tax, specifically on his proposed amendments to our VAT law,” he said.

Dominguez was referring to the proposal of Albay Rep. Joey Salceda to slap a tax on subscriptions to video and music streaming applications, advertisements on social media sites, and sales through online sites to augment lost revenues from the proposed corporate income tax (CIT) cuts from 30 percent to 25 percent targeted to aid small businesses hit by the Covid-19 pandemic.

Dominguez said the implementation of the CIT and the 12-percent VAT on these services would be a big help to the government’s revenue base. — Joann Villanueva (PNA)


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