Netflix urges ‘fair’ online tax scheme

Global entertainment giant Netflix expressed commitment to helping the government craft fair tax policies on foreign digital service providers (DSPs) amid the Marcos administration’s thrust to raise additional funds for its massive socioeconomic development plan.

In a Facebook post by the Department of Finance (DoF) on Wednesday, it shared that Finance Secretary Ralph Recto and several Netflix officials last Tuesday discussed the bill on value-added tax (VAT) for foreign DSPs, which also include Google, Amazon and Spotify. The others are e-commerce platforms like Temu, AliExpress and Shein.

The bill requires foreign DSPs to assess, collect, and remit a 12-percent VAT on transactions facilitated through their platforms for clients in the Philippines.

Patterned after other nations

“Netflix wants to make sure that the rules we will formulate for the VAT on DSP bill is aligned with how other countries identify the taxpayers liable to pay VAT and how the place of the transaction will be identified,” the DoF Communications Division said in a Viber message to the DAILY TRIBUNE.

“Finance Secretary Recto committed that we will continue to work with key stakeholders in the crafting of the VAT on DSP implementing rules to ensure the smooth implementation of the measure,” DoF added.

Albay Representative and Chairperson of the House Committee on Ways and Means Joey Salceda had said that the passage of the bill will ensure fairness to local entrepreneurs using online platforms.

“While resident content producers were subject to VAT and income taxes, foreign service providers were not. This created an unfair situation,” he said.

The DoF expects the government to collect P83.8 billion in revenues from foreign DSPs by 2028.

However, Salceda said the bill will not require VAT on small businesses with annual sales of less than P3 million.

The consolidated version of the bill by the Senate and the House of Representatives was approved by the Bicameral Conference Committee in June.

Netflix officials who joined the meeting with the DoF this week included the company’s Indirect Tax senior manager Davy Chen and Public Policy Manager for Southeast Asia Shangari Kiruppalini.

Aside from Recto, the Philippine officials in the meeting also included DoF Chief-of-Staff and Undersecretary Maria Luwalhati Dorotan Tiuseco, DoF Assistant Secretaries Karlo Adriano and Alan Quebral, and Bureau of Internal Revenue Chief-of-Staff Luis Sixtus Esquivias.