Philippines Imposes 12% VAT on Digital Services

MANILA (Reuters) – The Philippines is set to impose a 12% value-added tax (VAT) on digital services from tech giants such as Amazon, Netflix, Disney, and Alphabet. This decision aims to create a level playing field with local businesses, according to the internal revenue agency.

President Ferdinand Marcos Jr. signed the law on Wednesday, targeting non-resident digital service providers including streaming platforms and online search engines. “This will promote fair competition among businesses profiting from consumers in the Philippines. A level playing field produces better products and services,” stated Bureau of Internal Revenue Commissioner Romeo Lumagui.

Previously, only domestic digital service providers were obligated to pay the tax. Currently, Netflix has not commented; Disney, Google, and Amazon did not respond to requests for comment.

The government anticipates collecting 105 billion pesos (approx. $1.9 billion) from the VAT between 2025 and 2029, with plans to allocate 5% of the revenue for projects aimed at Philippine creative industries. Educational and public interest services will be exempt from the tax.

Digital services rendered by foreign firms are considered consumed in the Philippines when accessed within the country, the revenue agency explained. Since the pandemic, tech giants have seen increased usage in Southeast Asia but are facing stricter tax regulations.