DIGITAL TAX | House panel approves tax on Shopee, Lazada, Netflix, and other digital service providers

July 29, 2020 , 01:10 PM

(July 29, 2020) – A lower house panel on Wednesday approved a 12 percent sales tax on goods and services provided by various online platforms to raise much needed revenues to fund an economic recovery package for next year’s 4.3 trillion national budget.

The committee on ways and means at the House of Representatives will slap levies on transactions made through online shopping vendors, like Shopee and Lazada as well as social media Facebook, and Netflix.

These platforms have become popular as the government imposes a strict lockdown from mid-March as brick and mortar businesses were forced to shut down.

“The objective is to level the playing field na if you are making profit from here, selling to Filipinos here, you should pay taxes here,” said Rep. Sharon Garin, vice chairperson of the House tax panel.

The measure seeks to amend the National Internal Revenue Code by including a 12 percent Value-Added Tax (TAX) on digital service providers.

“Any person who, in the course of trade or business, sells, barters, exchanges, leases goods or properties, including those digital or electronic in nature, renders services, including those rendered electronically, and any person who imports goods shall be subject to value added tax imposed on section 106 to 108 of this code,” according to the unnumbered substitute bill.

The finance department estimates that the government could raise up to 10 billion pesos through the digital taxation measure. Around 9 billion pesos was estimated from nonresident entities, and another billion pesos from local transactions.

“The calculation of P1-B that can be generated from the bill, we excluded the e-commerce estimates that could also represent those sales done online which are reputable under the VAT system. The one billion pesos projected revenue are only from the digital transactions,” said Finance Assistant Secretary Daki Napao in the committee hearing.

Digital service providers such as Facebook, e-commerce applications Shopee and Lazada, as well as Netflix and Spotify are set to be covered in the measure.

Under Section 3 of the bill, digital service providers who operate an online platform for purposes of buying and selling goods and services, or by making transactions on behalf of any person shall include the following:

- A third party that acts as a conduit for goods or services offered by a supplier to a buyer and receives commission therefore, which may also be considered as a merchandiser or retailer when buyers purchase goods or services from an intermediary service
- A platform provider for promotion that uses the internet to deliver marketing messages to attract buyers
- A host of online auctions conducted through the internet, where the seller sells the product of service to the person who bids the highest price
- A supplier of digital services to a buyer in exchange for a regular subscription fee over the usage of the said product or services
- A supplier of electronic and online services that can be delivered through an information technology infrastructure, such as the internet

The bill also defined digital services that could be imposed with the 12 percent VAT, since they cannot be obtained without the use of information technology, include the following:

Online licensing of software, updates, and add-ons, website filters and firewalls, mobile applications, video games, and online games webcast and webinars
Provision of digital content such as music, files, images, text and information
advertisement platform such as provision of online ad space on intangible media platform
Online platform such as electronic marketplaces or networks for the sale, display, and comparison of prices or trace products or services
Search engine services and social networks
Database and hosting such as website hosting, online data warehousing, file sharing and cloud storage services
Internet-based telecommunication
Online training such as provision of distance learning, e-learning, online courses and webinars
Online newspapers and journal subscription
Payment processing services

Section 8 of the amendment though, clarifies that nonresident digital service providers shall be liable to register for VAT if their gross sales for the past 12 months have exceeded three million pesos, or have reasonable grounds to believe gross sales in the next 12 months will exceed 3 million pesos.

“What we are addressing here lang is not to local or anything mga small time na nagbebenta, no they’re not the target here,” said Garin.

The bill was proposed by Albay Rep. Joey Salceda, AAMBIS-OWA Party-list Rep. Garin, PBA Party-list Rep. Jericho Nograles, Marikina Rep. Stella Quimbo, Aklan Rep. Teodorico Haresco, Quezon City Rep. Jesus Suntay, Nueva Ecija Rep. Estrellita Suansing, and Isabela Rep. Alyssa Tan

Singapore-based Shopee, backed by China’s Tencent Holdings, was the most downloaded e-commerce app and the most used in Southeast Asia as of end-2019, according to research firm iPrice.

Its rival, Alibaba’s Lazada, has been knocked to second place.

The Department of Trade and Industry previously floated that digital sales should be taxed, which was met with much criticism from the public. Many have resorted to online selling as the government restricted the return of businesses due to the coronavirus pandemic.

But the DTI clarified that small online sellers, or those who earn 250,000 pesos below annually, need not register their business with the Bureau of Internal Revenue. (Reports from Ria Fernandez | Katrina Elaine Alba/MM)

Privacy Statement

Our Privacy Commitment

TV5 Network Inc. values and respects your privacy. We are committed to safeguarding your personal data in compliance with Republic Act No. 10173 or the Data Privacy Act of 2012 and its implementing rules and regulations.

We have developed a Privacy Policy that adopts and observes appropriate standards for personal data protection. While our Privacy Policy sets out the general principles governing the collection, use, and disclosure of our users’ personal information, our Privacy Commitment seeks to inform you more about TV5’s privacy practices.

Why do we collect your personal information (as applicable)?

We may collect and maintain basic information about you as site user of TV5 sites for the following purposes:

To deliver news and updates on current events, sports, esports and entertainment;
To share livestreams of news and sports events;
To understand our viewers’ needs and preferences;
To meet legal and regulatory requirements; and
To perform other processes or disclosures that are required to comply with pertinent laws, rules, or regulations.

Where do we get your personal information?

There are several ways we collect your personal information.

Information that you personally provided.

Most of the personal information we have are those that you have provided us when you:
- Register to our programs or services;
- Inquired, filed a complaint or requested for our services;
- Took part in our research and surveys; and/or
- Became our Partner, Vendor, Contractor or Supplier.

Information we collect during your engagement with us

We also collect information as you use our products and services, like:
- Viewing our websites;
- Activities that are being tracked by our website cookies;
- Calling our hotline;
- Using our apps, websites, and self-service channels and portals; and/or
- Joining our promos, prize raffles, or rewards and loyalty programs.

Information we collect from other sources

Other means of collection of information may be through:
- Our market research initiatives;
- When you visit and use our websites and mobile application; and
- Subsidiaries, affiliates, and third-party business partners to whom you have given consent to share your information to us.

When do we disclose personal information?

There may be instances when we are required to share the information you provided us. In such cases, we ensure that your personal information will be disclosed on a confidential manner, through secure channels and in compliance with the Data Privacy Act and other privacy laws.

We will never share, rent, or sell your personal information to third parties outside of TV5 except in special cases where you have given consent, and in cases described in our privacy policy.

In some instances, we may be required to disclose your personal information to our agents, subsidiaries, affiliates, business partners and other third-party agencies and service providers as part of our regular business operations and for the provision of our programs and services. This means we might share your information with our service providers, contractors, and professional advisers who help us provide our services.

How we protect your personal information

The integrity, confidentiality, and security of your information is important to us. We have implemented technical, organizational, and physical security measures that are designed to protect your information from unauthorized or fraudulent access, alteration, disclosure, misuse, and other unlawful activities.

We also put in effect the following safeguards:

We keep and protect your information using a secured server behind a firewall, encryption and security controls;
We keep your information only for as long as it is necessary for us to (a) provide the products and services that you avail from us, (b) for our legitimate business purposes, (c) to comply with pertinent laws, and (d) for special cases that will require the exercise or defense of legal claims;
We limit the access to your information only to qualified and authorized personnel who are trained to handle your information with strict confidentiality;
We undergo regular audits and rigorous testing of our infrastructure’s security protocols to ensure your data is always protected;
We promptly notify you and the National Privacy Commission when sensitive personal information that may, under the circumstances, be used to enable identity fraud are reasonably believed to have been acquired by an unauthorized person; and
We let you update your information securely to keep our records accurate.

TV5 will not collect, use, or disclose your personal information for any purpose other than the purpose that you may have given your consent for.

What are your choices?

We make sure that we have your consent to continue to collect, use, and disclose your personal information for the purposes that we have identified. We want you to know that you may object or withdraw your consent and/or edit your consent preferences at any time.

If you wish to have access to the personal information in our custody or if you think that the personal information you provided is incomplete, or otherwise inaccurate, you may get in touch with our Data Protection Officer through the contact details provided below. In some instances, we may request for supporting documents or proof before we effect requested changes.

Data Protection Officer
TV5 Network Inc.
Reliance corner Sheridan Streets
Mandaluyong City
tv5dataprivacy@tv5.com.ph

What happens when there are changes in our Policy?

From time to time, we may update our privacy policy and practices to comply with changes in applicable laws and regulatory requirements, adapt to new technologies and protocols, and align with the best practices of the industry.

You will be provided notices if the changes are significant and, if we are required by law, we will obtain your updated consent.