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Philippines to impose 12% VAT on digital services provided by tech giants Amazon, Netflix, disneyand letterThe IRS said Thursday the move would level the playing field for domestic brick-and-mortar businesses.
President Ferdinand Marcos Jr. signed a law on Wednesday imposing value-added tax on non-resident digital service providers such as streaming services and online search engines.
“This will promote fair competition among businesses that profit from Filipino consumers. A level playing field will lead to better products and services,” Bureau of Internal Revenue Commissioner Romeo Lumage said in a statement.
The agency said that now only domestic digital service providers are required to pay the 12% VAT.
A spokesperson for Netflix Asia Pacific said in an email that it had no statement to share at this time. Disney, Google and Amazon did not respond to requests for comment.
The government aims to collect 105 billion pesos ($1.9 billion) in value-added tax between 2025 and 2029.
Education and public interest services will be exempt from VAT, the office added.
The tax agency said digital services provided by foreign companies are deemed to be provided in the Philippines if they are consumed in the Southeast Asian country.
Tech giants have seen increased usage in Southeast Asia since the outbreak, but they also face increasingly strict fiscal and tax regimes.