House plenary urged to raise threshold for VAT on digital transactions

THE threshold for requiring digital service providers (DSPs) to charge value-added tax (VAT) needs to be raised to P5 million in gross sales or receipts, from P3 million as specified in a measure currently undergoing plenary debate, a legislator said.

Samar Rep. Paul R. Daza said in a statement on Wednesday that he approved in principle of making DSPs collect VAT, but cited the need “to protect SMEs (small and medium enterprises) and other small players.”

According to his statement, he also told the plenary session debating House Bill No. 4122 on Monday that “VAT, a consumption-based tax, is not always good for the economy.”

“The intention is certainly good as we indeed need to impose VAT on big companies such as non-resident DSPs,” he added.

He said as a matter of policy, he prefers getting foreign DSPs to establish a presence in the Philippine, where their earnings can be directly taxed.

The bill is part of a broader effort to find new sources of government revenue to fund pandemic recovery efforts. — Kyanna Angela Bulan