Gabriela solon opposes VAT on Spotify, Netflix

Imposing value-added tax (VAT) on non-resident digital service providers (DSPs) would only mean higher subscription payments for consumers, Gabriela Partylist Arlene Brosas said on Thursday, Aug. 18, as she thumbed down the recently approved legislation that taxes digital services and products.

(Photo from Gabriela Women’s Party-list Facebook)

In a virtual media briefing, the lawmaker lamented that subscription fees on Netflix and Spotify, as well as prices of Microsoft and Apple software licenses and apps on the Android Google Play and Apple’s App Store, would increase once the measure becomes law.

She added that even mobile game developers and the foreign digital payment services that overseas Filipino workers (OFWs) use would pass the 12 percent VAT to their consumers.

“Hindi sapat na argumento ang umano'y pagpatas sa playing field sa pamamagitan ng pagbubuwis sa (The argument of leveling the playing field for) foreign digital service providers dahil ipapasa lang din naman ang VAT sa (is not a sound argument because they will just pass on the VAT to) Filipino consumers,” Brosas said.

“Instead of VAT, we can impose higher corporate taxes on foreign digital service providers, hindi dapat (it should not be) consumption-based tax.”

The House Committee Ways and Means on Wednesday, Aug. 17, approved a proposed bill that would impose VAT on non-resident DSPs, such as Amazon, Google, Spotify, and Netflix.

READ: House panel OKs bill imposing VAT on foreign-based digital services

Albay 2nd District Rep. Joey Salceda, chair of the House Ways and Means, said during the hearing that this was long overdue and done to level the playing field since non-resident DSPs are taxed all over the world.

The Department of Finance (DOF) supports the measure, saying that the Bureau of Internal Revenue (BIR) would finally have a mechanism to collect VAT from non-resident DSPs.

Brosas, who also attended the committee hearing on the digital tax, said there is no assurance that the burden of the new tax will not be passed on to the consumers.

“Dagdag pasanin ito gayong nagtataasan pa rin ang presyo ng mga bilihin (This is an additional burden amid the already rising prices of commodities),” her statement on Wednesday read.

“We cannot be comforted by the assurance that there will be no pass-on charges supposedly because the 12 percent digital tax will be credited as tax compliance in the platform’s origin country. Iba ang binabayaran nilang buwis kumpara sa panukalang (The tax they are paying is different compared to the proposed) VAT on digital transactions na ito (like this),” she added.

The Gabriela Party-list lawmaker also suggested that scholarly digital services commonly used by educational institutions, such as webinar platforms, be excluded from the coverage of the digital tax bill so as not to further burden the students relying on them.