PBBM signs into law the VAT on Digital Services Act

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00:00If one makes good money in doing business in the country or on Filipinos, then it is only fair for he or she to pay a small and reasonable percentage of their earnings in taxable income.

00:11So says the president earlier today in inking the new 12% value-added tax on foreign digital service providers as our Kenneth Pachenta tells us in this story.

00:21If you are reaping the rewards of a fruitful digital economy here, it is only right that you contribute also to its growth.

00:33That is what President Ferdinand R. Marcos Jr. emphasized following his signing of Republic Act No. 12023 or the Value-Added Tax on Digital Services Law.

00:43The law will impose an additional 12% tax on foreign digital service providers or DSPs.

00:49This includes online search engines, online marketplaces, cloud services, among others.

00:55According to the president, the purpose of this law is to help the government generate additional revenue and ensure fairness for local e-commerce providers, especially since local DSPs pay VAT while their foreign competitors enjoy a tax advantage resulting, he says, in unfair competition and a disadvantage for local businesses.

01:15With this law, we say that if your presence in the Philippine market is as real as your profits, then your tax responsibility should also be equally tangible.

01:27But make no mistake, we are not imposing new taxes. We are simply strengthening the authority and streamlining the process of the BIR to collect value-added tax on digital services.

01:39With this law, it is forecast and expected that P7.25 billion will be collected in 2025, with a total of P105 billion by 2029.

01:49The president stressed that 5% of the total VAT collected will be allocated for the local creative industry and other government initiatives for nation-building.

01:59Educational and public interest services such as online courses, webinars, and other digital educational offerings will not be subjected to the additional tax to ensure they remain accessible.

02:10To our partners in the digital space, let this be seen as an invitation to help build a Bagong Pilipinas, where innovation flourishes, especially as we promote competition.

02:23I call for the support of all the companies and entrepreneurs who will be covered by this law.

02:28The chief executive also directed relevant government agencies to ensure the proper implementation of the new law.

02:34Kenneth Paciente, from the National TV Network, for a new and better Philippines.

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