The Philippines is set to implement a new taxation system aimed at international digital services, targeting major players like streaming platforms and search engines.

In 2023, it was noted that Filipinos dedicate a significant portion of their day to mobile usage, yet many popular services are not based locally and evade a 12% value-added tax (VAT) that local businesses must pay. This situation is about to change with fresh legislation designed to extend the tax framework to foreign entities, as reported by global VAT compliance sources.

This tax will affect a variety of services including streaming giants like Netflix, Max, and Disney+, along with e-commerce sites such as Shein. Other online entities, including search engines and cloud service providers like Amazon and Google, will also fall under this tax structure.

Philippine President Ferdinand Marcos Jr. emphasized the need for foreign companies benefiting from the local digital economy to contribute to its development, according to Bloomberg.

Under the new regulations, larger foreign digital service providers must register with the Bureau of Internal Revenue (BIR) and designate a local representative to oversee their tax responsibilities in the Philippines. Non-compliance could result in the suspension of their services within the country.

The anticipated tax revenue is projected to reach $1.4 billion within the next four years, which will be allocated to various government initiatives and infrastructure projects. This move may also foster the growth of regional streaming platforms like Hong Kong’s Viu, enabling them to compete more effectively against American tech behemoths, as noted by Firstpost.

In a related context, three years ago, South Korean internet service provider SK Broadband sought financial contributions from Netflix, citing increased data consumption due to the success of the series "Squid Game." The two companies reached a settlement last year.

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