The government may rake in up to P90 billion in revenues over the next five years should the Senate pass a bill charging foreign digital service providers, such as Netflix, a 12-percent VAT, Sen. Sherwin Gatchalian said. | MRamosINQ /PDI
“All local corporations [offering] digital goods and services are already paying 12-percent VAT. The problem with our tax code is that it did not cover nonresidents or foreign-owned [digital services],” Gatchalian told reporters.
Gatchalian said imposing VAT on web-based transactions would provide the government additional annual tax revenues of over P17 billion, or about P90 billion in the first five years.He said the TWG, composed of representatives of various sectors, would discuss the provisions regarding the collection of VAT, which will also cover digital payment companies, video games, mobile applications and even social media networks.
In particular, Gatchalian said, the BIR should be able to explain how it intends to audit digital companies based abroad to make sure they are declaring their profits truthfully.
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