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Manila Bulletin devider Business devider Trade & Industry devider DTI: VAT on foreign digital services to boost local creatives

DTI: VAT on foreign digital services to boost local creatives

Published Oct 16, 2024 04:52 am

The Department of Trade and Industry (DTI) stated that the imposition of value-added tax (VAT) on digital service providers (DSPs) will promote healthy competition in the local market.

In a statement on Wednesday, Oct. 16, DTI Secretary Cristina A. Roque said that this measure levels the playing field for local digital platforms by ensuring that foreign DSPs contribute their fair share of taxes.

“With a more competitive landscape, we can better leverage digital technologies to innovate, expand, and thrive in the global marketplace,” Roque said.

“Ensuring that all DSPs, regardless of origin, contribute their fair share promotes healthy competition, and supports the growth of our local enterprises,” she added.

Earlier, President Marcos signed Republic Act (RA) No. 12023, imposing a 12 percent VAT on non-resident digital service providers (DSPs) like Netflix, Disney, and HBO.

The law is expected to generate significant new revenue streams, valued at P105 billion over the next five years.

In 2025 alone, the government anticipates revenue to reach P7.25 billion, assuming a 50 percent compliance rate.

Moreover, the new law allocates five percent of the projected total revenue to the Malikhaing Pinoy program, supporting the Philippine creative sector.

DTI said this allocation will benefit over 7.26 million Filipinos employed in the Philippine creative industries, providing wider support and opportunities for those involved in arts, entertainment, design, and media.

“We are thrilled with the inclusion of the creative industries in this new law. This is a significant win for our creative industries that work tirelessly to enrich world-class Filipino creative content on digital platforms,” said DTI Competitiveness and Innovation Group Undersecretary Rafaelita M. Aldaba.

“Through the intensified implementation of the Malikhaing Pinoy Program, we will be able to enhance our efforts in nurturing Filipino talent. Through this, we can also ensure that they thrive in local and global markets as they harness the potential of the country's creative industry. Our goal is to establish the Philippines Asia’s premier creative hub by 2030,” she added. (Derco Rosal)

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Philippine creative industries Department of Trade and Industry VAT on Digital Transactions
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