THE House of Representatives and Senate approved a bill seeking to put value added tax (VAT) on non-resident digital service providers (DSPs).
This was announced in the House's website, wherein the bicameral conference committee report that reconciled both House Bill 4122 and Senate Bill 2528 was ratified by both chambers of the Congress on July 30, 2024.
The Department of Finance (DOF) earlier estimated that the measure could bring in about P83.8 billion in revenue from this year through 2028.
The bill mandates a 12 percent VAT on digital services consumed in the Philippines, applicable to both resident and nonresident providers.
Digital services include online search engines, marketplaces, cloud services, media, advertising, and digital goods.
Nonresident providers must register for VAT if their gross sales exceed P3 million annually.
Online marketplaces are responsible for remitting VAT on transactions by foreign sellers under specific conditions.
Lawmakers have indicated that approximately five percent of the revenue would be earmarked for the development of creative industries.
Senate Ways and Means Committee Chair Sherwin Gatchalian emphasized that through the bill, Bureau of Internal Revenue's authority to impose and collect VAT on digital services and transactions will be strengthened in case of violations.
"The bill gives the Commissioner of the BIR the power to block or suspend services of providers who violate VAT rules. This is to ensure no violations slip through, whether from digital or traditional service providers," Gatchalian.
The bill will be sent to President Ferdinand Marcos Jr. for approval. (Fred Leander Baldos, VSU intern)
