House panel OKs bill on VAT on foreign digital service providers

By Filane Mikee Cervantes

August 17, 2022, 5:44 pm

MANILA – A measure imposing a 12-percent value-added tax (VAT) on foreign digital service providers (DSPs) hurdled committee level at the House of Representatives.

During a hearing on Wednesday, the House Committee on Ways and Means approved House Bill No. 372, which seeks to level the playing field between traditional and digital businesses by clarifying the imposition of VAT on DSPs.

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.

It also includes the provision of digital content, such as music, files, images, text, and information; online advertising spaces; electronic marketplaces; search engine services; social networks; database and hosting; and online training.

“The measure also aims to strengthen tax compliance through simplified invoicing and registration requirements for VAT-registered nonresident DSPs," Albay Rep. Joey Salceda, author of the bill, said.

The panel also approved the proposed Ease of Paying Taxes Act, which seeks to reduce documentary requirements, allow taxpayers to file their returns in any revenue district office, and remove the annual taxpayer registration fee.

Salceda, who chairs the House committee on ways and means, said the measure proposes to institute a taxpayer bill of rights and designate a taxpayer advocate office.

“The bill aims to simplify tax filing and payment, and address burdensome tax compliance which affects our small and medium enterprises and turns off our investors. We hope that this could reduce the tax gap, estimated to be PHP909 billion in 2018,” Salceda said.

The measure seeks to segment taxpayers, to simplify the forms and requirements for small taxpayers, allow filing and paying of taxes to be portable, and harmonize the documentation for substantiating VAT credits.

The PHP20-excise tax per kilogram of single-use plastics proposal also got the panel's approval.

According to the bill, an excise tax of PHP20 for every kilogram of plastic bag removed from the place of production or released from the custody of the Bureau of Customs shall be imposed.

The allocation of the proceeds, which is estimated at PHP1 billion per year, will be used for the implementation of the solid waste management, it noted.

Salceda assured that the panel will pass all priority measures of President Ferdinand Marcos Jr. and the Department of Finance.

“We will try to finish all PBBM’s and DOF’s priority bills this month. Hopefully, by next week, the House tax panel is done with everything, so we can proceed with our own tax measures as well as the administrative and oversight matters,” Salceda said. (PNA)