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Acting Department of Trade and Industry (DTI) Secretary Ma. Cristina Roque said the newly signed Republic Act (RA) 12023, imposing a 12 percent value-added tax (VAT) on online services from foreign providers promotes an equitable digital economy in the country.
“This landmark legislation is a significant step towards creating a more equitable and inclusive digital economy in the Philippines. By ensuring that all digital service providers, regardless of origin, contribute their fair share to the country’s tax system, we are promoting healthy competition and supporting the growth of our local MSMEs (micro, small and medium enterprises),” Roque said in a Viber message Thursday.
She added that the new law eliminates the long-standing disparity where foreign digital service providers (DSPs) were exempted from the 12 percent VAT, giving an “unfair advantage” over local players.
“This levels the playing field for our local MSMEs by removing the unfair advantage previously enjoyed by foreign digital service providers,” Roque said.
“With a more competitive landscape, our MSMEs can better leverage digital technologies to innovate, expand their reach, and thrive in the global marketplace."
RA 12023 was signed by President Ferdinand R. Marcos Jr. on Oct. 2, to ensure that both local and foreign digital DSPs contribute to the national coffers.
The VAT on Digital Services Law mandates a 12-percent VAT on services provided through digital platforms, such as streaming services, online advertising, and e-commerce.
The new law also protects consumers by ensuring transparency in the prices of the digital services they avail of.
