Philippines Imposes 12% VAT on Foreign Digital Services

Publish date: Thursday، 03 October 2024

President Bongbong Marcos has officially enacted Republic Act No. 12023, which introduces a 12% value-added tax (VAT) on foreign digital service providers (DSPs) operating in the Philippines. This law applies to popular platforms like Netflix, Disney+, and HBO, even if they don't have a physical presence in the country.

Leveling the Playing Field

The “Value-Added Tax on Digital Services Law” is part of the administration’s goal to create fair competition between local businesses and foreign firms. President Marcos emphasized that companies profiting from the Philippine market should also contribute to its development. “If you are benefiting from our digital economy, you should also share in its growth,” he stated during the law's signing ceremony at Malacañang Palace.

Philippines Imposes 12% VAT on Foreign Digital Services

Revenue Goals and Impact

The government expects to generate approximately P105 billion over the next five years from this tax. These funds will be directed towards crucial infrastructure projects, including building 42,000 new classrooms, over 6,000 rural health units, and expanding farm-to-market roads by 7,000 kilometers.

Philippines Imposes 12% VAT on Foreign Digital Services

Supporting the Creative Industry

Additionally, 5% of the revenue collected will be allocated to support the Philippine creative industry. President Marcos noted that this investment will directly benefit local artists, filmmakers, and musicians. “Our creative talents should thrive in this competitive digital landscape,” he said, highlighting the importance of fairness in the market.

To read the full story for free, please enter your e-mail

Thank you for your subscription, you will receive our Newsletter shortly

Philippines Imposes 12% VAT on Foreign Digital Services

Related articles