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House OKs bill imposing tax on Netflix, Spotify users

The House of Representatives has approved a measure that is seeking to impose value added tax (VAT) on digital transactions, including streaming platforms such as Netflix and Spotify.

With 167 affirmative votes, six negative, and one abstention, the lower chamber approved on final reading House Bill No. 7425 which seeks to amend the National Internal Revenue Code of 1997, as amended.

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Under the measure, a 12 percent VAT shall be imposed on digital transactions. The tax shall be shouldered by the users.

The VAT also covers digital services related to online licensing of software, updates, and add-ons, filters and firewalls; mobile applications, video games, and online games; webcast and webinars; and provision of digital content such as music, files, images, text and information.

It also covers search engine services; social networks; internet-based telecommunication; online training such as provision of distance learning, e-learning, online courses and webinars; online newspapers and journal subscription; ad payment processing services.

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One of the lawmakers who voted against the measure, Gabriela Women’s Party Rep. Arlene Brosas, pointed out that the 12 percent tax is the highest digital tax in the ASEAN region.

“Tatamaan sa panukalang ito ang streaming services tulad ng Netflix at Spotify – mga platforms na tanging libangan ng maraming Pilipino sa ilalim ng pandemya,” Brosas said.

“Magmamahal din ang subscription fees ng premium accounts sa mga applications na pantulong sa pag-aaral ng mga bata tulad ng Canva at subscription-based journals na reference ng mga mag-aaral sa kolehiyo,” she added. (NM)

Staff Report

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