Albay Representative and Chairman of the House Ways and Means Committee Joey Salceda filed House Bill 6765 or the Digital Economy Taxation Act of 2020 to generate a revenue of an estimated P29.1 billion to fill the loss caused by the COVID-19.
Digital Economy Taxation Act of 2020
Salceda’s Digital Economy Taxation Bill aims to collect taxes on platforms offering digital services such as Netflix, Lazada, Facebook, Spotify, and Google.
In one of Salceda’s Facebook posts, he said, “Facebook and Google earn P50B from ads catering to and paid by Filipinos and they don’t pay VAT and income tax.”
Additionally, he said that Filipino firms like DCTV and Skycable are paying Value Added Tax (VAT ) and income taxes while no tax is collected from Netflix, which earns P5 Billion from subscriptions paid by Filipinos.
On the contrary, it pays taxes in countries like India, Indonesia, and the EU.
Yet in another Facebook post, the Albay Representative said that the bill will make Lazada a withholding agent although it pays P15 Billion taxes yearly because its overseas sellers do not pay VAT. He clarified that it is not a new tax or a tax increase, rather, it’s just making the overseas sellers pay VAT.
No New Taxes
Salceda clarified that House Bill 6765 does not intend to impose new taxes. Instead, it contains tax administration measures in collecting the fair share of platforms offering digital services in the country.
“No new taxes here, we just want them to pay a fair share. 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.” – Albay Rep. Jose Salceda, Albay Rep. and Chairman of the House Ways and Means Committee
In the Philippines, Salceda said that networks pay VAT for advertising services paid to them while internet giants like Google and Facebook are not subject to VAT for advertising.
while social media users who do not use these digital platforms for advertisement purposes will not be affected.
Key features of the Digital Economy Taxation Act of 2020
Here are the highlights of the bill according to Salceda:
1. Making “network orchestrators” like Grab, Angkas, and other similar services withholding agents for income taxes, to ease their partners of the burden of having to pay their own taxes, while also encouraging tax compliance.
2. Clarifying that services rendered electronically in the course of trade or business are liable to Value-Added Tax (VAT).
3. Clarifying that digital advertising by internet giants such as Google and Facebook and subscription-based services such as those of Netflix and Spotify are subject to VAT.
4. Making network orchestrators for lease services such as AirBnB, and electronic commerce platforms such as Lazada and Shopee withholding agents for VAT
5. Requiring those who render digital services to do so through a resident agent or a representative office in the Philippines, to address the issue of companies having a significant presence in the country without having a physical establishment in the Philippines not being liable for tax and regulatory purposes.
Digital Economy Taxation aims to protect consumers
Sighting the problem on runaway services, Salceda said that the bill aims to protect consumers as well. “Kapag may reklamo ka, paano mo sisingilin, wala naming opisina sa bansa, kaya wala naman kaming pwede panagutin.”
Furthermore, he made it clear that social media users who don’t use these platforms for advertising will not be affected.
SOURCE: Jose Salceda’s Facebook Account