On 21 September 2021, the House of Representatives approved on final reading a proposal imposing a 12% value-added tax (VAT) on digital transactions in the country to generate new funding sources for the country’s Covid-19 response efforts.
The bill seeks to clarify the imposition of VAT on online advertisement services, digital services in exchange for a regular subscription fee, and supply of other electronic and online services that can be delivered through the Internet. Digital services include online licensing or software, updates and add-ons, website filters and firewalls, mobile applications, video games and online games, and webcasts and webinars.
Under the Bill, small businesses and individuals with sales less than PHP3 million would be exempt from paying or filing VAT. If net income as a sole proprietor is below PHP250,000, are exempt from paying and filing income taxes. So, the small Facebook online seller will not be taxed. The bill would also exempt books and other printed materials that are sold electronically or online from VAT.
