The chair of the House ways and means panel on Wednesday emphasized that the bill approved by his committee imposing a 12-percent value-added tax on digital service providers, including Netflix and Lazada, was not a new tax.
Under the approved committee report, foreign corporations that sell digital services, such as Netflix, Spotify, and others, will have to pay for and impose VAT on their services.
“We imposed no new taxes. We’re simply clarifying that they should be VATed. In general, if you sell, you pay VAT, unless you fall under the exemptions for small businesses,” Salceda said.
He said his committee has already studied the impact of the committee report on incomes.
“77 percent of the revenues will come from upper middle-income families and above. The effective income tax rate on the bottom 20 percent of the population is 0.01 percent, and that progresses, until 0.09 percent for the highest income classes,” Salceda said.
“This is the mildest imposition you can make when the country is in severe need of new revenues. And it covers a mostly discretionary spending,” he said.
Salceda added that only “0.04% of all revenues from this proposal will come from the bottom 20% of the population.”
On Wednesday, the House committee approved its committee report on a bill imposing VAT on goods and service providers above the P3 million VAT threshold.
In approving the bill , the committee “has kept its promise of imposing no new taxes, guaranteeing exemptions for small businesses, and closing loopholes for large foreign corporations,” Salceda said.
“We have now clarified that digital services and the goods and services traded through digital service providers should generally be subject to VAT,” he said.
“This is just a matter of common tax sense,” Salceda said, adding that “if brick and mortar establishments, which are the hardest-hit by the pandemic, have to pay VAT, the giants of e-commerce shouldn’t be exempt.”