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Manila Bulletin devider Business devider DOF gains Netflix support for VAT on foreign digital services

DOF gains Netflix support for VAT on foreign digital services

Published Aug 21, 2024 06:38 am

Senior Netflix officials support the bill on 12 percent value-added tax (VAT) for foreign digital service providers, citing it would level the playing field between local and international digital service providers, according to the Department of Finance (DOF).

According to a Facebook post on Wednesday, Aug. 21, DOF Secretary Ralph G. Recto, met with Netflix representatives on Tuesday to discuss the measure, which is currently pending enactment by the president.

Recto provided clarifications on the bill and assured Netflix of the government's commitment to supporting the industry's growth.

He also said that the tax would aid in generating additional government revenues for development projects and programs for the Filipino people.

“Netflix shared their eagerness for the bill's implementation and committed to collaborating with the government to achieve mutually beneficial outcomes,” the DOF post reads.

Representatives from Netflix were Indirect Tax Senior Manager Davy Chen and Public Policy Manager for Southeast Asia Shangari Kiruppalini.

Also present were Chief-of-Staff and Undersecretary Maria Luwalhati Dorotan Tiuseco; Assistant Secretary Karlo Adriano; Assistant Secretary Alan Quebral; and Special Assistant to the Bureau of Internal Revenue (BIR) Philippines Commissioner Luis Sixtus Esquivias.

In June, lawmakers approved the harmonized version of House Bill 4122 and Senate Bill 2528 during the bicameral conference.

This version of the bill aims to impose a 12 percent VAT on digital transactions by non-resident digital service providers such as Netflix, Disney, and HBO.

Under the measure, taxpayers subject to the percentage tax are limited to those who fall below the VAT threshold of P3 million in annual sales set under the Tax Reform for Acceleration and Inclusion Act.

The BIR may allow the blocking or suspension of the digital providers' services should they fail to withhold and remit the 12 percent VAT on transactions with clients in the Philippines.

Around P20 billion in estimated revenues are expected to be collected by the government from the VAT on digital services every year, Recto said.

Related Tags

digital service providers Department of Finance (DOF) Netflix
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