A lawmaker recently filed House Bill No. 6765 (or the ‘Digital Economy Taxation Act of the Philippines’), which proposes changes to the way the digital economy is currently being taxed.
The bill is also a response to the increased urgency in finding new sources of revenue to fund the country’s efforts to recover from the adverse impacts of COVID-19. The Bill is still in the very early stages of the legislative process, hence we can expect enhancements as it goes through congressional deliberations – although a number of issues remain to be addressed. For instance, the Bill is targeting to collect more taxes from subscription-based services including electronic publishing (e-books), and appears to adopt the BIR’s stance in a 2012 issuance that the selling of e-books is subject to VAT. Since the government is applying the same tax rules to both bricks-and-mortar and digital businesses, it would seem reasonable to expect the sale, importation and publication of e-books to follow the same VAT treatment as those applied to hard copies, i.e., they should be VAT-exempt.