Philippine lawmakers have approved a joint bill seeking to tax foreign digital services including Netflix, HBO and Disney, aiming to secure a fresh source of state revenue to bankroll additional spending.
The bill, from both the Senate and the House of Representatives, seeks to impose a 12% value-added tax on digital transactions on non-resident digital service providers such as the streaming providers, the Senate said in a Facebook post on Thursday.
The move could help nurture domestic streaming platforms, while global players including Neflix Inc. and regional provider Viu, seek to expand in the country of more than 110 million people and the broader Southeast Asia region.
The large, young populations of the Philippines and nearby countries present a significant opportunity for growth for the global services.
The proposed tax could generate as much as 18 billion pesos ($420 million) in its first year of implementation, the Philippine Daily Inquirer reported, citing Congressman Joey Salceda.
The Department of Finance earlier estimated about 84 billion pesos revenue from the measure from this year through 2028. Lawmakers said about 5% of the revenue would be allocated for the development of creative industries.
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The tax measure has been on the drawing board since at least the onset of the pandemic four years ago. But President Ferdinand Marcos Jr. and his economic team are facing pressure to increase revenue to rein in the government’s budget deficit and curb debt. The bill will require Marcos’ signature to become a law.
The budget department on Thursday unveiled a proposed 2025 national budget of 6.35 trillion pesos, up 10% from this year’s and higher than previously announced amid plans for more infrastructure spending.
