Tech giants face new VAT in the Philippines
New tax law in the Philippines aims to create fair competition between global tech companies and local businesses.
The Philippines has introduced a 12% value-added tax (VAT) on digital services from foreign companies like Amazon, Netflix, Disney, and Google. President Ferdinand Marcos Jr signed the new law, aiming to establish fair competition between global tech companies and local businesses. The measure will apply to streaming platforms and online search engines used in the country.
Bureau of Internal Revenue Commissioner Romeo Lumagui emphasised that levelling the playing field will push businesses to improve their products and services. Currently, only domestic providers are subject to the 12% VAT. Foreign tech giants have yet to comment, with Netflix offering no statement and other firms like Disney and Google remaining silent on the matter.
The government expects to raise 105 billion pesos ($1.9 billion) between 2025 and 2029 from the new tax. A portion of these funds will support Philippine creative industries. Educational and public interest services will be exempt from the VAT, according to the presidential office.
Since the pandemic, there has been a significant rise in the use of digital services across Philippines and Southeast Asia in general. However, these tech giants now face growing pressure from stricter tax regimes in the region.