Netflix, Not Chill? Congress Approves VAT on Digital Services

Extra charges are at 12%.

netflix
PHOTO BY pixabay

(SPOT.ph) As current quarantine measures still restrict mobility, Filipinos became more dependent than ever on digital services, such as Netflix and Spotify for entertainment, Lazada for shopping, and Grab for transport. Subscription prices are affordable enough with Netflix' monthly rates starting at P149, for example. But the House of Representatives seems to have other things in mind as the Congress approved House Bill 7425, which imposes value-added tax on digital transactions in the Philippines, on its third and final reading.

Submitted by Representatives Joey Sarte Salceda and Sharon S. Garin on August 18, 2020, the act collates similar proposals by Representative Vilma Santos-Recto, Representative DV Savellano, and other members of the lower house. It poses that "any person who sells, barters, exchanges, leases goods or properties, including those digital or electronic in nature, renders services, including those rendered electronically, and any person who imports goods shall be subject to the value-added tax (VAT)."

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This indirect tax is equivalent to 12% of gross receipts derived from the sale or exchange of services. At present, all sales of services—from the goods we purchase from groceries to the food we order from restaurantsare taxed through VAT.

In May, Netflix increased their monthly rates in Kenya after the country enforced VAT through Digital Service Tax. Indonesia also imposed a 10% VAT on sales by tech firms like Amazon, Netflix, Spotify, and Google starting in July 2020.

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