Netflix Expresses Support For VAT On Foreign Digital Service Providers

Netflix, the media streaming service offering a wide range of TV shows, movies, anime, and documentaries on thousands of internet-connected devices, has expressed strong support for the proposed value-added tax (VAT) on foreign digital service providers, the Department of Finance (DOF) announced.

The bill aims to level the playing field between local and international digital service providers.

The bicameral conference committee of Congress has approved the final version of the bill, which is a priority legislation of the Legislative-Executive Development Advisory Council (LEDAC).

The bill aims to level the playing field between local and international digital service providers.

Finance Secretary Ralph Recto noted that the government expects to generate more than PHP20 billion from the proposed 12% VAT on foreign digital service providers.

He highlighted that during a meeting with senior Netflix officials, including Indirect Tax Senior Manager Davy Chen and Public Policy Manager for Southeast Asia Shangari Kiruppalini, the company expressed strong support for the measure.

Recto provided clarifications on the bill and assured Netflix of the government's commitment to supporting the industry's growth.

Meanwhile, Representative Joey Salceda, Chairman of the House Ways and Means Committee, stated that the VAT on digital services would ensure a level playing field between local and foreign digital service providers, as the latter had "unfettered and untaxed access" to the Philippine market.

"While resident content producers were subject to VAT and income taxes, foreign service providers were not. This unfairness to the domestic sector for at least four years is why the House contingent believes that we owe the resident creatives sector some measure of compensation and support," Salceda emphasized.

Salceda shared that the two chambers of Congress achieved a consensus on two issues: withholding tax on percentage taxpayers as proposed by the DOF, and earmarking funds for the local creatives sector.