The Asia Internet Coalition (AIC) has submitted comments on the Act on Fiscal Regime and Taxation of the Digital Economy in the Philippines. The purpose of this submission is to share industry comments and recommendations on the House Bill No. 6765 (“HB 6765”) (an Act Establishing a Fiscal Regime for the Digital Economy, Amending for the Purpose Sections 57, 105, 108, and 114 of the National Internal Revenue Code, and for Other Purposes, introduced by Representative Joey Sarte Salceda), and P.S. Res. No. 410 (urging the Senate Committee on Ways and Means and the Appropriate Senate Committees to Conduct an Inquiry, in Aid of Legislation, Into the Possibility of Imposing and Collecting Taxes from Multinational Online Streaming Services and the Digital Economy in General, introduced by Senator Ramon Bong Revilla, JR.).
We understand that the House Bill (HB) No. 6765, or the “Digital Economy Taxation Act,” was filed on 19 May to capture into the tax system the value created by the digital economy. The bill seeks to impose a 12% value-added tax (VAT) on digital advertising services (such as those on search engines and social media platforms), subscription-based services (including music and video streaming subscriptions), services rendered electronically, and transactions made on electronic commerce (e-commerce) platforms. Moreover, the bill would require suppliers of digital services, network orchestrators, and e-commerce platforms to establish a resident agent or representative office to act as a withholding agent in the Philippines.