Just when the Philippines is shifting to digital payments and e-learning due to COVID-19, the House Committee on Ways and Means has approved a bill imposing a 12% value added tax (VAT) on virtual transactions, an additional burden to Filipino consumers. The bill covers e-commerce apps like Shopee and Lazada, as well as streaming apps like Netflix and Spotify.

The bill specifically includes online licensing of software, mobile applications, video games, webcast and webinars, digital content, advertisement platforms, electronic marketplaces, search engine services, social network services, database and website hosting, online data warehousing, file sharing, cloud storage services, Internet-based telecommunications, e-learning, and digital payment processing.

Department of Finance (DOF) Secretary Carlos Dominguez III said earlier that taxing digital services is critical as the new normal brought by COVID-19 resulted in the increase in digital consumption.

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