THE Senate resolution seeking to tax digital platforms, including streaming services, cites the need to address shortcomings in enforcing tax rules on multinationals doing business in the Philippines, its author said.
Senator Ramon B. Revilla, Jr., author of Senate Resolution No. 410, said in the resolution that “there is a need to implement a fair and just taxation scheme, capture transactions of multinational companies related to the digital economy into our tax base, and plug the leakages in our tax laws.”
Mr. Revilla asked the Senate Ways and Means Committee to explore taxes on the Philippine digital economy, which is projected to grow to P25 billion by 2025.
He said Norway, Australia, and Japan, have passed digital service tax laws to “collect taxes from local consumption and use of digital content and services from foreign providers.”
Mr. Revilla also cited a memorandum, issued by the Bureau of Internal Revenue, in which the agency reminded online businesses that their Philippine transactions are likewise subject to tax.
Finance Secretary Carlos G. Dominguez III, has said that those engaged in online transactions are not strictly complying with their tax obligations.
“For instance, the issue on VAT (Value-added Tax) — if you buy floor polisher from the store, there is VAT, but if you buy from Lazada, there is no VAT charge. We are figuring out how to do this,” Mr. Dominguez told Mr. Revilla in a Senate hearing Wednesday.
He also said his department is now studying digital services, particularly internet streaming, and how the government can earn revenue from transactions.
“For Internet streaming, how are we going to identify the transaction and the amount involved? We are studying it,” he said.
House Ways and Means Committee Chairman Jose Maria Clemente S. Salceda of Albay on Tuesday filed the proposed Digital Economy Taxation Act in that chamber.
Mr. Salceda’s bill is projected to generate P29 billion in revenue annually. It will, among others, impose VAT on all services “rendered electronically.”
The DoF has also submitted a “digital economy VAT” proposal to Congress, which is expected to generate P15 billion in revenue in 2021, P16.6 billion in 2022 and P18.4 billion in 2023. — Charmaine A. Tadalan