FINANCE Secretary Ralph G. Recto recently met with senior officials of streaming platform operator Netflix, Inc. to clarify the proposed value-added tax (VAT) law for foreign digital service providers, the Department of Finance (DoF) said on Wednesday.

“Secretary Recto provided clarifications on the bill and assured Netflix of the government’s commitment to supporting the industry’s growth,” the DoF said of Mr. Recto’s meeting with the Netflix officials on Aug. 20.

The meeting included key Netflix representatives, such as Indirect Tax Senior Manager Davy Chen and Public Policy Manager for Southeast Asia Shangari Kiruppalini.  

Also present were Chief-of-Staff and Undersecretary Maria Luwalhati C. Dorotan Tiuseco, Assistant Secretary Karlo Fermin S. Adriano, Assistant Secretary Gerald Alan A. Quebral, and Bureau of Internal Revenue (BIR) Chief-of-Staff Luis Sixtus A. Esquivias.  

“Netflix representatives expressed strong support for the measure, emphasizing that it would level the playing field between local and international digital service providers,” the DoF said.

“This will help generate additional government revenues for development projects and programs for the Filipino people,” it added.

The proposed law seeks to levy a 12% VAT on resident and non-resident digital service providers. It was passed by Congress in June and only lacks the signature of President Ferdinand R. Marcos, Jr. to become a law.  

The Finance department expects to collect P10.87 billion in 2025 if the VAT on digital services becomes a law. This is seen increasing to P21.35 billion in 2026 and P22.81 billion in 2027.  

Digital services refer to those provided over the internet or other electronic networks through information technology. These include online search engines, online marketplaces, cloud services, online media and advertising, online platforms, and digital goods.  

Failure to tax foreign digital companies harms their domestic counterparts, lawmakers said.  

During the bicameral conference committee on the proposed measure, lawmakers pushed to earmark 5% of the bill’s revenues to support the domestic digital creative industry. — B.M.D. Cruz