The House of Representatives voted 167-6 with one abstention to approve the final reading of House Bill No. 7425, which imposes a 12% value-added tax (VAT) on transactions of foreign corporations such as Netflix, Spotify, and other digital service providers (DSPs) on Tuesday, September 21.

The bill covers that the VAT is for entities that provide digital services or goods to a buyer through the use of online platforms for transactions, selling, buying, and service purposes.

The new designated Section 105 A of the National Internal Revenue Code of 1997 can also be applied in online licensing of software, updates and add-ons, west filters and firewalls; mobile applications, video games, and online games; webcast and webinars; and provision of digital content such as music, files, images, text, and information.

In addition, the tax also seeks engine services; social networks; internet-based telecommunication; online training such as the provision of distance learning, e-learning, online courses, and webinars; online newspapers and journal subscriptions, and ad payment processing services.

It was introduced by Representatives Joey Sarte Salceda, Sharon Garin, Vilma Santos-Recto, Deogracias Victor Savellano, Estrellita Suansing, Jericho Jonas Nograles, Teodorico Haresco, Jr., Jesus Suntay, Kristine Singson-Meehan, Micaela Violago, Sergio Dagooc, Weslie Gathalian, Arnie Fuentebella, Jose Ong Jr., Joy Myra Tambunting, Rose Marie Arenas, Prospero Pichay Jr., Jake Vincent Villa, Lorenz Defensor, Raneo Abu, Jumel Anthony Espino, and Horacio Suancing.

House Bill No. 7425 is created to objectively generate revenues from new sources to fund the country’s efforts to recover from the adverse impact of the COVID-19 pandemic.

Source: https://www.congress.gov.ph/legisdocs/first_18/CR00426.pdf