The House committee on ways and means approved on Wednesday, July 29, a 12% tax on digital transactions, as demand for online services surges during the coronavirus pandemic.

The unnumbered bill slaps the tax on the following types of businesses:

• Third party that acts as conduit for goods or services, platform for promotions, and host of online auctions. Examples of these include online stores like Lazada and Shopee.

• Supplier of digital services in exchange for a regular subscription fee, and suppliers of electronic and online services that can be delivered through an information technology infrastructure. Some of these are streaming services like Netflix and Spotify.

The bill also proposes to tax digital services such as online licensing of software, updates and add-ons, website filters and firewalls, mobile applications, video and online games, webcasts and seminars, online advertising, search engine services, social networks, cloud storage services, internet-based telecommunication, online trainings, online newspapers and journal subscriptions, and payment processing services.

In earlier interviews, House ways and means committee chairperson and Albay 2nd District Representative Joey Salceda noted that subscription fees collected by apps like Netflix and Spotify are not taxed.

The proposal comes as the government expects lower tax collections due to business closures, resulting in a wider budget deficit. – Rappler.com