The Philippines House of Representatives on September 21 approved a 12% value-added tax (VAT) on digital transactions that will apply to foreign corporations selling digital services in the country.
The tax will apply to subscription-based digital services like Netflix, online advertising services, electronic marketplaces, online software, and other types of services delivered online.
“If brick and mortar establishments, which are the hardest-hit by the pandemic, have to pay VAT,” lbay Rep. Joey Salceda, the principal author of the bill said, “the giants of e-commerce shouldn’t be exempt.”
Exemptions will apply for small businesses and individuals with sales below certain thresholds, as well as for books and printed materials sold electronically.
Way to go Philippine government, this will only hurt the great people of the Philippines, as foreign corporations will either raise prices to cover for their online services, or diminish the use of out sourcing services to Filipinos commensurate with the new tax. Dumb idea!