Economy
World Bank: Time For PH to Tax Online/Digital Business Transactions
World bank urges the Philippines to start processing the collection of value-added tax (VAT) on online businesses and other digital transactions.
Countries in asia like the Philippines, Vietnam, Thailand, Singapore, Malaysia and Indonesia have lost $5 billion potential revenues due to the failure of applying VAT on digital transactions.
Potential revenue losses may increase to $6 billion this year, $8 billion next year, $9 billion by 2023 and it may skyrocket to $14 billion by 2025 if the government of these countries leave it unaddressed.
“Evidence from East Asia indicates that the rapid growth of business-to-consumer e-commerce has resulted in equally significant growth in the tax potential of the sector,” World Bank states.
Online media and food delivery is seen to have the most rapid growth in digital economy. World Bank said that a VAT registration threshold should be performed by the authorities, with amendment to tax rules of course.
Meanwhile, the Philippine congress have a pending bills regarding the collection of 12% VAT from digital goods and services.
For the Department of Finace, they stated that a state planning with the National Economic and Development Authority (NEDA) Imminent as they need to establish a solid framework on how to maximize digital economy including tax collections.
Digital services including streaming apps and video subscriptions were pushed to be taxed by Albay rep. Joey Salceda.
A data also showed that other countries are taxing the digital economy by 5-19% to boost the country’s economy especially amid the COVID-19 pandemic. (MLC)
