A party-list legislator has asked her colleagues in the House of Representatives to accelerate the approval of the digital taxation bill, saying its enactment into law will “provide equal footing between traditional and digital businesses.”
Party-list Rep. Sharon Garin of AAMBIS-OWA, chair of the Committee on Economic Affairs, raised the call as she quelled fears on its provisions by explaining the imposition of the value-added tax on digital service providers.
The proposed Digital Economy Taxation Act is still pending at the House.
Garin, who heads the technical working group (TWG) on the measure, lamented the inequity between major non-resident foreign corporations (NRFCs) that profit from Filipino consumers without being required by law to pay taxes, while locally-registered businesses are automatically subjected to it.
“As the digital economy grows, rules and standards must be set in place to ensure that there is no tax leakage,” she said.
Garin added: “The bill provides a clear definition of a liable digital service provider (DSP) and requires non-resident DSPs to collect and remit the VAT on the transactions that pass through its platform. Non-resident DSPs will also be required to register for VAT if gross sales or receipts for the past year have exceeded P3 million.”
Addressing the objections raised on the proposed taxation on Internet-based telecommunication, distance teaching, and e-learning, Garin explained that books and other printed materials sold electronically or online are exempted from VAT.
She also clarified that the tax to be imposed will only be on transnational digital transactions and that there is no expected increase in the price of online transactions for locally-established service providers.
Garin is the author of House Bill 6944, known as the Digital Taxation Act, one of the three consolidated bills lodged in the Committee of Ways and Means. The Committee Report on the proposed measure is expected to be released within the week.
The government is expected to collect P10 billion upon the enactment of the measure and the money can be used to fund the government’s COVID-19 response projects and galvanize the country’s economic performance, she added.