The Philippine Chamber of Commerce and Industry (PCCI) said that the imposition of value-added tax (VAT) on non-resident digital service providers creates a fairer competitive landscape for local businesses.
In a statement, Enunina Mangio, PCCI president, said the recent signing of the VAT on Digital Services law, officially known as Republic Act 12023,is a welcome development.
Mangio explained that the new tax framework will enhance competition by leveling the playing field between local and foreign digital service providers.
“By imposing VAT on both local and foreign digital services, the government is creating a more competitive environment for local digital service providers and greater incentives for them to innovate and improve their offerings,” Mangio said.
She added that the new law is also expected to encourage local businesses to formalize their operations, thereby increasing their credibility and consumer trust.
Mangio noted that a structured taxation system could play a crucial role in this process.
Additionally, the PCCI underscored the importance of this legislation in modernizing the nation’s tax system and improving the efficiency of tax collection within the rapidly growing digital economy.
The revenue generated could be reinvested in ICT infrastructure and digital initiatives, ultimately benefiting local service providers and creative industries.
This move aligns the Philippines with international practices, as countries like Singapore, Indonesia, and Malaysia have already implemented similar digital tax measures. Thailand introduced a VAT on foreign digital services in 2021.
The Department of Finance (DOF) expects to generate approximately P102.12 billion over the next five years from this new law.
According to the DOF, the estimated revenues collected from 2025 to 2029 will be allocated to projects such as building more schools, roads, and hospitals, as well as supporting vital socio-economic programs.
For 2025 alone, the DOF projects a revenue collection of around P7.25 billion, assuming a 50-percent compliance rate.