Philippines Imposes 12% VAT on Digital Services Provided by Tech Giants

The Philippines is set to implement a value-added tax (VAT) of 12 percent on digital services provided by tech giants like Amazon, Netflix, Disney, and Alphabet. This measure aims to level the playing field with domestic brick and store firms.

The application of Value-added tax (VAT) on non-resident digital service providers, including streaming services and online search engines, was authorized by President Ferdinand Marcos Jr.

Bureau of Internal Revenue Commissioner Romeo Lumagui said "This will promote fair competition amongst businesses that are profiting from consumers here in the Philippines. A level playing field produces better products and services," 

Currently, only domestic digital service providers must pay the 12 percent VAT.

The government wants to utilize the VAT to raise 105 billion pesos, or $1.9 billion, between 2025 and 2029. It intends to use five percent of this income to support initiatives in the Philippine creative industries.The presidential communications office said

The office also stated that services in the public interest and education would not be subject to VAT. Tech companies have been using their products more in Southeast Asia since the pandemic, but they are also subject to more onerous fiscal tax laws.