The value-added tax (VAT) on digital media and advertising is expected to generate P102.12 billion in revenue for the government by 2029, the Department of Finance (DoF) said.ffcial said.
“We hope that… many of the DSPs (Digital Service Providers) will comply so that we can really reap the benefits of this measure,” DoF Director and representative of the Organization for Economic Co-operation and Development, Euvimil Nina R. Asuncion, told to reporters. the sidelines of an event on Wednesday.
Republic Act No. 12023, which imposes a 12% value-added tax on digital service providers, both residents and non-residents, was signed in October.
The DoF expects to collect €7.25 billion from VAT on DSPs in 2025 and €21.37 billion in the following year.
In 2027, the collective expects to collect P22.81 billion, followed by P24.42 billion in 2028 and P26.27 billion in 2029.
The estimates assume that 80% of the tax base represents non-resident DSPs, while 20% consists of resident DSPs.
Non-resident DSPs should be subject to the 12% VAT rate as they are considered to have no input VAT.
Meanwhile, resident DSPs are subject to the net VAT rate of 7% as they are considered to have an input VAT of 5% of the tax base.
Ms. Asuncion said VAT on DSPs is expected to come into effect on May 16, while revenue rules will be released on January 16.
VAT on digital services portals is also expected to go live on March 31.
The objectives of the Development Budget Coordination Committee take into account the revenue assumptions of DSPs, Ms. Asuncion noted.
She also said DSPs could be expected to increase subscription prices, but added that any increases would not be substantial.
“For the smallest subscriptions, we see a very minimal price increase if they follow the 12% VAT rate,” she says. — Aaron Michael C. Sy