DOF: Netflix backs VAT on foreign digital service providers

MANILA: Finance Secretary Ralph Recto on Wednesday met with senior Netflix officials on Aug. 20, 2024, to discuss the bill on value-added tax (VAT) for foreign digital service providers.

“[The] meeting went well. It’s part of consultations with stakeholders such as Netflix,” Recto told the Philippine News Agency in a Viber message.

The government is expected to generate more than PHP20 billion from the proposed 12 percent value-added tax on foreign digital service providers, Recto said.

In a separate Facebook post, the Department of Finance (DOF) said Netflix representatives expressed strong support for the measure, which would level the playing field between local and international digital service providers.

Representatives from Netflix include Indirect Tax Senior Manager Davy Chen and Public Policy Manager for Southeast Asia Shangari Kiruppalini.

The DOF said that during the meeting, Recto provided clarifications on the bill and assured Netflix of the government’s commitment to supporting the industry’
s growth.

“Netflix shared their eagerness for the bill’s implementation and committed to collaborating with the government to achieve mutually beneficial outcomes,” the DOF said.

In June this year, the bicameral conference committee approved the final version of the proposed tax on foreign digital service providers which is a priority legislation of the Legislative-Executive Development Advisory Council (LEDAC).

House Ways and Means Committee chair Joey Salceda earlier said the VAT on digital services would ensure an equal playing field between local and foreign digital service providers since the latter had “unfettered and untaxed access” to the Philippine market.

“While resident content producers were subject to VAT and income taxes, foreign service providers were not. This unfairness to the domestic sector for at least four years is why the House contingent believes that we owe the resident creatives sector some measure of compensation and support,’ he said.

Salceda said the two chambers of Congress a
chieved a consensus on two issues – withholding tax on percentage taxpayers as proposed by the DOF, and the earmarking of funds for the local creatives sector.

Source: Philippines News agency