THE value-added tax (VAT) on digital media and advertising is projected to bring the government P102.12 billion in revenue by 2029, a Department of Finance (DoF) official said.
“We hope that… a lot of the DSPs (Digital Service Providers) will comply, so that we really reap the benefits of this measure,” DoF director and Organization for Economic Co-operation and Development Representative Euvimil Nina R. Asuncion told reporters on the sidelines of an event on Wednesday.
Republic Act No. 12023, which imposes a 12% value-added tax on digital services providers, both resident and non-resident, was signed into law in October.
The DoF expects to collect P7.25 billion in 2025 from VAT on DSPs and P21.37 billion in the following year.
In 2027, it projects collections of 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, with 20% consisting of resident DSPs.
Non-resident DSPs are to be subject to the 12% VAT rate as they are assumed to have no input VAT.
Meanwhile, resident DSPs are subject to the 7% net VAT rate as they are assumed to have an input VAT of 5% of the tax base.
Ms. Asuncion said the VAT on DSPs is expected to take effect on May 16, with the revenue regulations to be released on Jan. 16.
The VAT on digital services portals is also scheduled to go live on March 31.
The Development Budget Coordination Committee targets have taken into account the revenue assumptions from DSPs, Ms. Asuncion noted.
She also said DSPs can be expected to increase subscription prices, but added that any hikes would not be substantial.
“For the smallest subscriptions, we see a very minimal increase in the price if they follow the 12% VAT rate,” she said. — Aaron Michael C. Sy