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What will happen to your subscriptions if the gov’t taxes Spotify, Netflix?

A proposed "Lazada tax" is also looking into the possibility of taxing online sellers in Lazada, Amazon, and Shopee.

In light of the COVID-19 pandemic, cities and regions in the Philippines have been placed in various forms of quarantine. Transportation hasn’t been operational for months, people have been staying home as a way to lessen the spread of the virus.

Aside from the pandemic, people have another enemy: cabin fever. That’s why many people turned to digital streaming platforms to keep themselves occupied.

Also Read: Here’s why you feel so tired while in quarantine — and what to do with it!

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With thousands of shows and movies for an affordable fee, Netflix is the go-to streaming service of Filipinos, especially during these trying times. But streaming your favorite TV show may soon cost you more.

Also Read: Netflix film ‘The Two Popes’ sheds light on the unlikely friendship between Pope Francis and Pope Benedict

A bill that sent social media abuzz was House Ways and Means Committee Chairman Joey Salceda’s House Bill 6765 or the “Digital Economy Taxation Act of 2020.” The said measure aims to raise funds for the country’s recovery from the impact of COVID-19. It would lead about P29.1 billion in incremental revenues for the government.

Senator Ramon “Bong” Revilla Jr. also filed a resolution to look into the possibility of taxing multinational online streaming services. The Senate Resolution 410 is a proposal to craft legislation on a digital taxation framework.

What services will be taxed?

Calculator Photo by StellrWeb on Unsplash

Under the bill, taxes will be imposed on subscription-based streaming services such as Netflix and Spotify. This means that a value-added tax (VAT) will be charged for every subscription. The current standard digital services tax slapped on subscriptions worldwide was 5%. Salceda says that a 12% VAT on video and music subscriptions is also possible. At present, personal subscription fees collected through said services weren’t levied any tax by the government, says Salceda.

Digital advertising by Google and Facebook will also be subject to VAT. But Salceda clarified that only those who advertise in these platforms will be taxed.

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The bill also proposed the “Lazada tax” which aims to tax vendors in online marketplaces such as Lazada, Amazon, and Shopee. These online platforms will also be tapped to serve as withholding tax agents of their suppliers. VAT collections from these platforms will yield to about P30 billion.

The prolonged lockdown imposed due to the pandemic has sent the country in danger of a recession.

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