Albay Representative Joey Salceda is pushing for the taxation of digital services such as subscriptions to video and music streaming apps, ads on social media sites, and online sale platforms as withholding tax agents. Salceda intends to call this new tax as ‘Netflix tax’, ‘Facebook ads tax’, and ‘Lazada tax’.
The Digital Economy Taxation Bill or House Bill 6765 intends to raise Php 29.1 billion in new revenues, according to Salceda, chair of the House tax-writing panel.
In an article by the Inquirer, the purpose of the tax is ‘to offset an estimated P120 billion in foregone revenues once the government cuts corporate income taxes to 25 percent to soothe the pain inflicted by COVID-19 on businesses’. Read more: Salceda wants additional tax on digital services like Netflix, Lazada, FB ads, an article by the Inquirer.
As of date, subscription to digital services has not levied any tax by the Philippine Government.
“Assuming you’re a company that sets up in the Philippines, and you do video-streaming or music-streaming services, you will definitely pay taxes. But companies like Netflix and Spotify don’t. That’s obviously not fair,” states Albay Representative Joey Salceda, in an article by ABS CBN.
“Internet marketplaces like Lazada and Shopee are growing very rapidly due to COVID-19, but there may be issues of tax compliance among its partners, too. And we are not able to capture that because our current definitions do not include them as withholding agents kahit nahawakan na nila ‘yung pera (even if they’ve held the money),” he adds.