Philippines’ Department of Finance announced that President Ferdinand R. Marcos, Jr. enacted Republic Act (RA) 12023 on 2 September 2024, imposing a 12% value-added tax (VAT) on non-resident digital service providers (DSPs), including streaming platforms such as HBO, Netflix, and Disney.
The law is designed to generate revenue and encompasses online search engines, advertising platforms, media outlets, digital marketplaces, and cloud services.
“If you are reaping the rewards of a fruitful digital economy here, it is only right that you contribute also to its growth. After all, whether you are a small tech startup or a global tech giant based halfway around the world, if you are making money here in the Philippines, you’re a part of our community, and with that comes a shared responsibility,” Marcos said.
He stressed that foreign companies benefiting from the Philippines’ digital economy should pay taxes similar to local and international businesses.
According to the President, about PHP 105 billion in revenue is expected to be collected in the next five years due to RA 12023. The collected revenues will be used to fund infrastructure and government projects.
The amount is enough to build 42,000 classrooms, over 6,000 rural health units, and 7,000 km of farm-to-market roads. Additionally, 5% of the revenues generated by the law will be allocated to the local creative industry.
