Salceda proposes tax targeting tech giants to fund COVID-19 fight

May 22, 2020 - 6:06 PM
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A smartphone with the Netflix logo lies in front of displayed "Streaming service" words in this illustration taken March 24, 2020. (Reuters/Dado Ruvic/File Photo)

A lawmaker has introduced a bill in parliament aimed at taxing big tech firms such as Facebook, Alphabet’s Google and Youtube, Netflix and Spotify, to raise funds to battle the coronavirus.

The bill looks to raise 29 billion pesos ($571 million; ($1=50.74 Philippine pesos) by imposing a value added tax on digital services provided in the Philippines, a key growth area for e-commerce transactions as its people are among the world’s heaviest users of social media.

“We spent to fight COVID-19 and we need more to continue fighting it and recover,” Rep. Joey Salceda, the bill’s principal author, told Reuters.

“It sends a strong signal to the world that the Philippines is ready for the digital transformation. We are putting our taxation in order.”

Starting next year, Salceda said, funds raised from new taxes would also be used to finance digital programs such as a national broadband project and digital learning, to fill the education gap caused by school closures.

But it may take a while before the proposal is scheduled for debate, as lawmakers are busy deliberating on an economic stimulus package to jumpstart the Philippine economy, ravaged by pandemic-induced lockdowns.

Google, Netflix, and Spotify were not immediately available for comment. Facebook declined to comment.

The Philippines has recorded 13,434 virus infections, including 846 deaths and 3,000 recoveries, and has run nearly 208,000 tests among its population of more than 107 million.

Last week, neighboring Indonesia announced plans for VAT of 10% on digital products from July, to boost revenues amid the pandemic. Southeast Asian regulators held talks last year on a region-wide effort to tax tech giants more.  —Reporting by Neil Jerome Morales; Additional Reporting by Fanny Potkin in Jakarta; Editing by Clarence Fernandez