Tax approved for Netflix, Lazada and Shopee

The House Committee on Ways and Means approves the substitute bill imposing a 12% VAT on digital transactions such as Netflix, Lazada, and Shopee.

House Ways and Means panel Chairman Joey Salceda said:

“Iyong malalaking kumpanya katulad ng Netflix, nagbebenta sa Pilipinas kaya dapat magbayad ng VAT. Pero wala nang income tax kasi we did not require them to have a domicile here,” 

Deputy Speaker Sharon Garin added:

“Digital service providers from outside [the country] gain profit from our constituents but they don’t pay tax to Philippine government. This bill levels the playing field for local digital service providers,” 

The unnumbered bill seeks to amend Section 105-A of the National Internal Revenue for these types of services:

  • Third-party that acts as a conduit for goods or services, a platform for promotions, and host of online auctions like Lazada and Shopee.
  • All digital services that require a regular subscription fee, such as streaming services like Netflix and Spotify among others
  • Online auctions
  • Gaming

The bill defines a digital service provider as “an entity that provides digital service or goods to a buyer through 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.”

As to why the need to tax these services, this proposal took place as the government expects lower tax collections due to business closures, expecting a bigger budget loss.

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