MANILA – The Department of Finance (DOF) is expecting to generate a total of PHP101.76 billion if value-added tax (VAT) will be imposed on digital service providers (DSPs) from 2024 to 2028. During the public hearing by the Senate committee on ways and means, DOF Undersecretary Dakila Napo on Thursday said the government is eyeing to use this to implement more socio-economic programs of the government. “Assuming that there’s only 70 percent compliance among DSPs, we note that in 2024 alone, there will be a PHP17.64 billion additional collection on the part of the government,” Napo said noting that in 2025 it is estimated to grow to PHP18.96 billion; PHP20.25 billion in 2026; PHP21.63 billion in 2027; and PHP23.28 billion in 2028. “I think that if we use the 100 percent compliance for the 5-year period, I recall that this will amount to around PHP145 billion,” he added. The DSPs identified by the DOF are digital music, video games, and video-on-demand under digital media, and audio, banner, classifieds, influencer, search, and video under digital advertising. In November last year, the House of Representatives approved House Bill No. 4122 which seeks to impose a 12 percent VAT on foreign digital service providers, such as Netflix and Spotify. It also seeks to clarify the imposition of VAT on electronic or online sales of services such as online advertisement services and provision of digital advertising space, digital services in exchange for a subscription fee, and supply of other electronic and online services that can be delivered through the Internet. Senator Pia Cayetano also filed a Senate version of the measure seeking to amend Sections 105, 108, 109, 113, 114, and 236 of the National Revenue Code of 1997 which was reinforced by Senate Resolution No. 20 filed by Senator Ramon Revilla Jr. urging an inquiry in the possible imposition of collecting taxes from the “digital economy”. Napo clarified to the panel that the measure they are pushing is not seeking to implement a new tax imposition but rather just strengthening the Bureau of Internal Revenue’s authority to collect VAT on digital transactions. “This aims to clarify the imposition of VAT on electronics or online sale of services. This also defines the digital service providers who are liable,” Napo said. He also noted that if passed into law, it shall require non-resident service providers to register for VAT if their gross sales or receipts for the past year have exceeded PHP3 million and to collect and remit the VAT on transactions that pass through their platform. Senator Sherwin Gatchalian, who chairs the panel, pointed out that imposing VAT on digital service providers would help shore up the country’s national revenues, which fell as a result of the government’s multiple-pronged programs to stave off the consequences of Covid-19 (coronavirus disease 2019) crisis. ‘We all know that we are still reeling from the pandemic, as well as high inflation in the past few years. The committee is in unison with the national government in its quest of increasing revenue take to help support priority programs of the government,’ Gatchalian assured saying the measures would help provide a fair playing field between physical transactions and online transactions. (PNA)
Source: Philippines News Agency