Bureau of Internal (BIR) Commissioner Romeo Lumagui Jr. said Friday he supports the goal of Republic Act No. 12023 to level the playing field between brick-and-mortar companies and digital service providers, whether or not the latter have offices in the Philippines.
He said the new law promotes fair competition because it equalizes the value added tax (VAT) paid by both local and foreign companies as long as they are doing business in the Philippines.
“The BIR supports RA No. 12023. This will promote fair competition amongst businesses that are profiting from consumers here in the Philippines. A level playing field produces better products and services” Lumagui said.
The new law provides that digital service providers, in the course of trade or business, renders services are subject to VAT. Digital services delivered by non-resident digital service providers are considered rendered in the Philippines if the digital services are consumed in the country.
Digital service refers to any service supplied over the internet or other electronic network with the use of information technology and where the supply of the service is essentially automated.
This includes online search engines, online marketplace, e-marketplace, cloud service, online media and advertising, online platform or digital goods.
“This is not a new tax. RA No. 12023 only ensures that the VAT being paid by local digital businesses, will also be paid by foreign digital businesses,” Lumagui said.
