MANILA (Reuters) – The Philippines will impose a 12% value-added tax on digital services offered by technology giants such as Amazon (NASDAQ:), Netflix (NASDAQ:), Disney and Alphabet (NASDAQ:), in 2019. The Internal Revenue Agency said On Thursday, it is a move that will level the playing field with local players.
President Ferdinand Marcos Jr. on Wednesday signed a law imposing value-added tax on non-resident digital service providers such as streaming services and online search engines.
“This will promote fair competition among businesses that take advantage of consumers here in the Philippines. A level playing field produces better products and services,” Romeo Lumague, Commissioner of the Bureau of Internal Revenue, said in a statement.
The agency said that only local digital service providers are now subject to paying the 12% value-added tax.
Netflix does not have a statement to share at this time, a company spokesperson in the Asia Pacific region said in an email. Disney, Google and Amazon did not respond to requests for comment.
The government aims to collect 105 billion pesos ($1.9 billion) in value-added tax between 2025 and 2029. The Presidential Communications Office said the government plans to allocate 5% of these revenues to fund Philippine creative industries projects.
The office added that educational services and public interests will be exempt from value-added tax.
The revenue agency said digital services provided by foreign companies are considered provided in the Philippines if the digital services are consumed in the Southeast Asian country.
Since the outbreak of the pandemic, giant tech companies have seen higher usage in Southeast Asia, but they also face increasingly strict financial tax regimes.
($1 = 56.15 Philippine Pesos)