Economy · August 4, 2022

VAT launched on digital transactions

SENATOR Pia S. Cayetano is pushing for the passage of a proxy law that imposes value added tax (VAT) on all digital transactions, saying it is fair to traditional businesses that have been covered by the law for decades. ‘VAT.

In filing the Senate Law 250, the senator proposes to collect VAT on all sales and exchanges, or the exchange of products and services carried out “digitally or electronically” or using Internet technology, such as “online purchases, online video games, social networks, online courses and webinars, online newspapers and those with digital content such as movies and music ”.

Cayetano clarified that the measure should not be seen as an imposition of a new tax, but a clarification of the mandate of the Bureau of Internal Revenue (BIR), intended to strengthen BIR’s authority so that it can correctly collect VAT. from all digital service providers based and outside the country.

He added that it was also anchored on similar legislation passed by the House of Representatives to the Senate in 18th Congress, which aimed to standardize the treatment and taxation of traditional and digital business taxes.

Which means, he explained, that if VAT is imposed on a purchase in a department store, VAT should also be imposed on a purchase made on an online shopping platform and the BIR must also collect it from the digital service provider. .

Additionally, Cayetano noted that, based on an international report, the Philippines has “the fastest growing internet economy in Southeast Asia,” where 12 million new digital consumers have been added since the start of the pandemic. Covid-19 in 2020, apparently because blockades have forced people to shop for food and shop online for most of the products and services they need.

As the country continues to accelerate towards digitalization, Cayetano said it is therefore important that the tax collection system keeps pace with developments.

In his state of the nation speech, President Ferdinand Marcos Jr. said the government is looking to raise £ 11.7 billion in 2023 from the imposition of VAT on digital service providers.