Rep. Joey Salceda, the chairman of the Ways and Means Committee, recently resubmitted the Digital Economy Value Added Tax (VAT) Law. According to him, the House Bill 372 was introduced to “address ambiguities” relating to the Value Added Tax (VAT) and tax regulations. In addition, the congressman acknowledged that he intends to form a group to investigate the viability of taxing digital assets.
Salcedo stated, “It is now pretty clear that the digital economy should be subject to VAT, but evidently we are unable to obtain these revenues due to some anomalies in tax regulations.”
Salcedo listed the digital services that need to be available in his explanation note. considered “VAT-able”. Based on his list, anything that is related to “advertising, subscription-based services and other services that can be done online or can be delivered through the Internet.”
“Back in 2019, a P45-billion was present in the digital economy tax collections of the BIR, and then in 2020, the amount didn’t even move a bit, it remained as it is, P45 billion. That’s unbelievable given the changes of our transactions that are now mostly done digitally.”
Salcedo also mentioned that an estimate-over the course of five-years will result in P226.5 billion in revenue in Vat taxation on the digital transactions as well as the digital economy taxation services.
As the industry of fintech in web3 continuously grows, he has a plan to create a House Technical working Group that will study the possible taxations on digital assets that includes cryptocurrency, NFTs and the digital gambling as well.
“Catching-up” was one of the phrases that Salcedo said as he discusses on why the Department of Trade and Industry as well as the BIR’s rules should be revised, due to the growing industry of freelance as well as the quick mass adoption of work from home setup due to our current situation where the pandemic is still present.
In 2020, Salcedo also filed the House Bill 7864 or the “Blockchain Digital Technology Act”, which aims to identify the uses of blockchain technology and to also encourage its purpose in a bigger and broader economy.
Editor’s Note: This article by The Mega Maxi is not a financial advise.
