MANILA – President Ferdinand R. Marcos Jr. has officially signed Republic Act (RA) 12023 into law, imposing a 12 percent value-added tax (VAT) on foreign digital service providers (DSPs) such as Netflix, Disney, and HBO.
The law, signed on Wednesday (02 Oct 2024), is part of the administration’s priority measures aimed at generating additional government revenue and ensuring a level playing field for local providers.
In his message, Marcos emphasized the importance of equal contributions from all companies benefiting from the Philippine digital economy, whether they are small startups or global tech giants.
“If you are reaping the rewards of a fruitful digital economy here, it is only right that you contribute to its growth. Whether you’re a local tech startup or a multinational company earning from the Philippines, being part of our community comes with a shared responsibility,” Marcos said.
The government expects to collect around PHP105 billion in revenue over the next five years through this law. The funds will be used to build 42,000 classrooms, more than 6,000 rural health units, and 7,000 kilometers of farm-to-market roads.
Additionally, 5 percent of the revenues will go to supporting the local creative industry, including artists, filmmakers, and musicians, ensuring that the people who contribute content to digital platforms also benefit from this growth.
Marcos expressed his gratitude to the legislators for passing RA 12023 and called on companies to comply with the new rules.
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