Revilla proposes taxing foreign online businesses, services to augment COVID fund

Published May 20, 2020, 12:00 AM

by manilabulletin_admin


By Vanne Elaine Terrazola

Senator Ramon Revilla Jr. has proposed the imposition and collection of taxes from foreign online businesses and services to augment government funds for the COVID-19 response.

Senator Ramon Revilla Jr. (Senator Ramon Revilla Jr. official Facebook page / MANILA BULLETIN)
Senator Ramon Revilla Jr.
(Senator Ramon Revilla Jr. official Facebook page / MANILA BULLETIN)

On Tuesday, May 19, he filed Senate Resolution No. 410 asking the Senate Committee on Ways and Means and other appropriate committees to conduct an inquiry, in aid of legislation, into the possibility of collecting taxes from multinational online streaming and retail services.

Revilla said the government should take advantage of the growth of digital economy to raise revenues and boost its efforts to address the coronavirus disease outbreak and its impacts.

He said that even before the COVID-19 pandemic, the Philippine digital economy was expected to grow by more than 250 percent from $7 billion to $25 billion by 2025, equivalent to 5.3 percent of the country’s gross domestic product.

The implementation of the community quarantine across the country, he said, has increased the Filipinos’ consumption of digital content and online services.

“While we continue to enforce quarantine measures, such as social distancing and the prohibition on mass gatherings, and as we transition to what we call the ‘new normal,’ I am sure that more of our countrymen will use technology-based services like online streaming and online market,” Revilla said.

Aside from funding the country’s recovery plan, he said the tax collection could be used for the construction of “Schools for the Future” which are equipped with digital technologies and laboratories.

He said Filipinos are “voracious online users,” citing a study that said Filipinos spend about 10 hours and two minutes of their time in the internet, exceeding the global average online time of six hours and 42 minutes daily.

In the resolution, the senator also noted that some of the most technologically-advanced countries such as Norway, Australia, Japan, France, South Korea, United Kingdom, Singapore, and Malaysia have implemented digital service tax laws for the local consumption and use of digital content and services from foreign providers.

Unlike local online businesses that are covered by taxation laws, Revilla said “some multinational companies do not need to establish physical presence in our country in order to proceed with their business as technological advancements made it possible for them to offer their services in our country through various online platforms, even without local distributors.”

He said the establishment of a digital taxation framework is among the strategies recommended by the Inter-Agency Task Force Technical Working Group for Anticipatory and Forward Planning.

“We need to embrace the digital revolution of our time, and to comprehensively review and update our existing tax laws regarding digital economy,” he said.

A similar proposal was also raised in the House of Representatives by Rep. Joey Salceda, who filed the proposed “Digital Economy Taxation Act.”