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Guess it’s official: Your fave digital services will be taxed

Gabbi Garcia and Khalil Ramos for Scout x Globe

If we remember two months ago, Congress was eyeing to tax digital services like Netflix and Lazada―some of the few things keeping people sane while in quarantine.

Didn’t want to believe it at first, but guess what? It’s actually being pushed for real: The House just gave the seal of approval on imposing up to 12 percent value added tax on digital transactions.

This includes not only Netflix and Spotify subscriptions but everything else we’re buying on some of our go-to shopping apps, Shopee and Lazada.

The measure was approved by the House Committee on Ways and Means chaired by Rep. Joey Salceda, who filed a bill seeking to impose “Netflix tax,” “Lazada tax” and “Facebook ads tax.”

According to Salceda, offsetting “an estimated P120 billion in foregone revenues once the government cuts corporate income taxes to 25 percent” would help the government generate revenue and resources to combat the ongoing pandemic. 

“It’s really enforcing the VAT to be fair to everyone, whether buying online or buying from the shelf,” Finance Secretary Carlos Dominguez III said.

This decision comes two days after President Rodrigo Duterte stated at SONA that he wants Congress to work on the Corporate Recovery and Tax Incentives for Enterprises Act, which aims to reduce corporate income tax from 30 to 25 percent.

It should also be noted however that the government secured loans from multiple foreign entities specifically for its COVID-19 response: some of which came from Japan International Cooperation Agency (P23.5 billion), the World Bank ($1 billion or around P50 billion) and Beijing-based Asian Infrastructure Investment Bank ($750 million or around P37 billion).

 

Photo by Tamas Pap/Unsplash

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