Philippines lower house approves VAT for big tech firms

The Philippines’ lower house of Congress has approved a bill imposing taxes on tech giants like Facebook, Alphabet’s Google and Youtube, and Netflix.

Voting 167-6-1, lawmakers late on Tuesday approved on third and final reading a bill imposing a 12% value-added tax (VAT) on digital transactions in the Philippines.

It will require foreign-based digital service providers to assess, collect and remit VAT on the transactions that go through their platform.

In July 2020, a lower house committee approved the bill, which will tax firms that provide digital service or goods through an online platform. A similar bill has been submitted to the Senate.

The bill aims to raise 29 billion pesos ($579 million) to help fund government measures to fight the coronavirus.

The Philippines is a growing market for big tech firms, with Filipinos among the heaviest social media users in the world.

Facebook, Netflix, Spotify and Alibaba’s Lazada did not immediately respond to requests for comment.

A Google spokesperson said: “We comply with the tax laws in every country we operate in around the world including the Philippines, and will continue doing so as tax laws evolve.”

The new measure follows similar moves by other Southeast Asian countries to generate revenues from popular digital services.

Last year, Indonesia imposed a 10% VAT on sales by technology firms. Early this month, Thailand started collecting VAT from foreign tech companies. Reuters