The Philippines has introduced a 12 percent value-added tax (VAT) on digital services provided by tech companies like Amazon, Netflix, Disney, and Google.
Internet platforms such as Amazon, Netflix, Disney, Google, among others, do not reveal their revenue in the Philippines.
The Philippines had 117.4 million active cellular mobile connections. The number of internet users in the Philippines at the start of 2024 was 86.98 million. The Philippines has 86.75 million social media users in January 2024. PLDT and Globe Telecom are the leading mobile Internet service providers.
Mobile Internet use of smartphone customers in the Philippines is forecast to rise from 7.1GB in 2023 to 58.7GB in 2028, driven by the consumption of online video and social media content, GlobalData said.
This new policy, signed into law by President Ferdinand Marcos Jr. on Wednesday, aims to create fairer competition between global tech firms and domestic businesses.
Previously, only local digital service providers were required to pay the VAT, but the new law brings foreign providers under the same tax regime. The Bureau of Internal Revenue Commissioner Romeo Lumagui emphasized that the measure promotes a level playing field, which in turn drives better services and products for Filipino consumers.
The government expects to raise 105 billion pesos ($1.9 billion) from the tax between 2025 and 2029, with 5 percent of the revenue earmarked for funding projects within the country’s creative industries. Digital services consumed within the Philippines will be subject to the tax, although services related to education and public interest will be exempt.
