The bigger the prices, the emptier our bank accounts.
President Ferdinand Marcos Jr. has signed Republic Act No. 12023, which implements a 12% VAT on digital services provided by foreign companies. This law targets various digital service providers, including those offering music, online advertising, software, and movies such as popular platforms like Disney+, Netflix, etc. The goal is to recoup revenue that has been lost due to unclear tax regulations on e-commerce, particularly from foreign entities serving Filipino consumers.
The Bureau of Internal Revenue (BIR) Commissioner Romeo Lumagui Jr. indicated that while the VAT is set at 12%, this does not necessarily mean that prices will rise by that same percentage.
The law aims to enhance the BIR’s ability to collect VAT from foreign digital services, and the Department of Finance supports this move. Lumagui also mentioned that despite some recent shortfalls in collection targets, the BIR remains optimistic about its performance and plans to intensify enforcement efforts.
Now you know, expect additional prices of your membership fees, annual fees, or monthly fees of your favorite digital platforms because of this value added tax. The increase would go into effect on October 17, 2024.
