House approves bill that imposes VAT on foreign digital service providers

The House of Representatives has approved a bill that imposes value added tax (VAT) on foreign or non-resident digital service providers.

According to the report of GMA News Online, members of the House Committee on Ways and Means have approved the motion for approval made by Nueva Ecija Representative Ria Vergara.

Albay Representative Joey Salceda, the panel’s chairperson, said that foreign digital service providers are earning income in the Philippines and are paying taxes in their home countries, and the government wants a share of that.

“Otherwise, it would be disadvantageous to our local digital service providers which pay VAT,” he said.

Salceda said that VAT on foreign digital services is expected to raise PHP 9USD 0.15INR 13EUR 0.15CNY 1 billion in government revenues.

Gabriela party-list Representative Arlene Brosas, however, pointed out that imposing VAT will mean additional expenses to consumers and prefers to tax corporations rather than consumption-based services.

Salceda responded by saying that service providers are already passing it on when they pay VAT in other countries.