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Proposed changes to taxation of digital services

  • PH
  • June 02nd 2020

A lawmaker recently filed House Bill No. 6765 (or the 'Digital Economy Taxation Act of the Philippines'), which proposes changes to the way the digital economy is currently being taxed in the Philippines. The bill is also a response to the increased urgency in finding new sources of revenue to fund the country's efforts to recover from the adverse impacts of COVID-19. As part of the proposed changes, persons liable to VAT shall include those who sell or exchange goods or properties that are digital or electronic in nature, and render services including those rendered electronically. Income from such transactions would be subject to 12% VAT, and the 'network orchestrator system' or 'electronic commerce platform' (see below for definitions) would deduct and withhold the 12% VAT from the seller. The VAT withheld would be remitted within 10 days following the end of the month in which the withholding was made.

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