The Department of Trade and Industry (DTI) said Wednesday it supports Republic Act (RA) No. 12023, a landmark legislation that imposes a 12-percent value-added tax (VAT) on non-resident digital service providers (DSPs) such as Netflix, Disney and HBO.
RA 12023 aims to create a more equitable digital landscape by requiring foreign DSPs to pay their fair share of taxes. The law promotes healthy competition and enables local businesses to thrive.
“With a more competitive landscape, we can better leverage digital technologies to innovate, expand, and thrive in the global marketplace. Ensuring that all DSPs, regardless of origin, contribute their fair share promotes healthy competition, and supports the growth of our local enterprises,” said DTI Secretary Cristina Roque.
The law is projected to generate substantial revenue for the government, estimated at P105 billion over the next five years.
The Department of Finance expects a significant increase in revenue from the VAT on foreign DSPs, with P7.25 billion expected in 2025 alone.
To further support the creative sector, five percent of the total expected revenue will be allocated to the Malikhaing Pinoy program.
The initiative benefits over 7.26 million Filipinos employed in the Philippine creative industries, providing them with wider support and opportunities.
The Malikhaing Pinoy Program, a flagship DTI initiative, has been instrumental in developing the country’s creative industries.
With the additional financial support from RA 12023, the program is poised to expand its initiatives and empower Filipino creatives to compete globally.
