JM Chavaria, writing for Yugatech;

In a move aimed at bolstering government revenue, the Philippines has introduced a 12% value-added tax (VAT) on digital services offered by foreign firms. This includes popular platforms like Netflix, Spotify, YouTube, and Amazon, among other digital service providers (DSPs) — which have previously enjoyed tax exemptions.

Duey Guison, of Unbox.ph explains “Republic Act 112023, all services provided by resident and non-resident digital service providers regardless if they have a physical presence in the Philippines are subject to an additional 12% VAT. The law also adds a new provision to the Tax Code, where ‘”digital services delivered by foreign digital service providers are considered performed or rendered in the Philippines if the digital services are consumed in the Philippines.’”

The law does not only cover streaming service but basically “most” online service like ecommerce, digital platform or online merchant that caters to the Philippine market even if the company does not have any physical store or office in the Philippines.

In a press release, “Senate President Francis “Chiz” G. Escudero said the bill imposing a 12-percent value-added tax (VAT) on digital transactions will level the playing field for local and foreign digital service providers (DSPs), streamline tax administration and shore up government coffers by at least P80 billion in revenues.”

“Digital service is defined as any service supplied over the internet or other electronic network with the use of information technology and where the supply of the service is essentially automated. These include online search engines, online marketplace or e-marketplace, cloud service, online media and advertising, online platform, or digital goods.”

The law basically covers every companies doing online transaction.