Marcos signs law imposing 12% VAT on Netflix, Disney+, and other foreign digital services

President Ferdinand "Bongbong" Marcos Jr. signed the bill imposing taxes on foreign digital service providers (DSP) like streaming platforms Netflix and Disney+ as well as e-commerce site Amazon.

Republic Act No. 12023, a priority measure of the Marcos administration, imposes a 12% value-added tax on foreign DSPs to generate revenues for the government.

During the bill's signing in Malacañang, Marcos said the new law would level the playing field for local and foreign providers.

“If you are reaping the rewards of a fruitful digital economy here, it is only right that you contribute also to its growth," he said, adding that whether it's a tech startup or a tech giant, they have a responsibility if they're making money in the country.

Marcos said the government expects to collect about P105 billion in revenues over the next five years following the law's passage.

Such an amount, the President noted, is enough to build 42,000 classrooms, 6,000 rural health units, and 7,000 kilometers of farm-to-market roads.

Five percent of that amount would also be used for the development of the Philippine creative industry.

“This means our artists, filmmakers, musicians, the very people who fill our platforms with storage and the content, will directly benefit," Marcos said. "It ensures that our creative talents are not just surviving in a competitive digital market, but will be allowed by fairness and progress."

Ahead of the bill's passage, Senate President Chiz Escudero noted that neighboring countries have been imposing taxes on digital services and transactions.

The law defines digital service as any service supplied over the internet or other electronic network with the use of information technology.

These include online search engines, online marketplace or e-marketplace, cloud service, online media and advertising, online platforms, or digital goods.