Bill Imposing 12% VAT on Foreign Digital Services Approved

The bicameral conference committee has approved a bill to impose a 12% value-added tax (VAT) on non-resident digital service providers, announced Albay Representative Joey Salceda. The bill aims to level the playing field by taxing foreign digital service providers who currently enjoy untaxed access to the Philippine market, unlike local content producers who are subject to VAT and income taxes. This measure is expected to generate up to P18 billion in its first year.
Key agreements include the withholding tax on percentage taxpayers and earmarking P900 million of collected funds for the local creative sector. The bill ensures that small businesses protected under existing laws will not face excessive audits or complex compliance. Taxpayers subject to percentage tax are those below the P3 million VAT threshold set by the TRAIN law.