In the span of five years, from 2024 to 2028, the Department of Finance (DOF) is anticipating reaping Php101.76 billion should the agency start levying on digital service providers (DSP).
DOF Undersecretary Dakila Napo, during the Senate public committee hearing on ways and means, on Thursday, stated that the government is looking to tap into the resource as a means to roll out more of the government’s socio-economic programs.
Granted that at least 70 percent of the DSPs comply with their tax duties, Napo estimates a collection of Php17.64 billion in 2024 alone, also highlighting an expected government revenue from the tax of Php18.96 billion in 2025; Php20.25 billion in 2026; Php21.63 billion in 2027; and Php23.28 billion in 2028.
But if there is complete compliance with all DSPs, it is anticipated for the total accrued amount to rise to Php145 billion in the same period.
The DOF identified DSPs as those associated with video games, digital music, and video-on-demand under digital media, in addition to banners, audio, classifieds, search, influencers, and video under digital advertising.
In November of 2022, House Bill No. 1422 was greenlit, imposing a 12 percent VAT on foreign digital service providers, including Spotify and Netflix.
In addition, the bill also looks to shed light on the imposition of VAT on online or electronic sales of services, which includes online advertisement services, the offering of digital advertising space, digital services for a subscription fee, and the provision of online and electronic services delivered via the internet.
Acting as a proponent of the possible taxation of the “digital economy,” Senator Pia Cayetano sought to amend Sections 105, 108, 109, 113, 114, and 236 of the National Revenue Code of 1997 with a Senate rendition, reinforcing Sen. Ramon Revilla Jr.’s Senate Resolution No. 20.