Philippines Moves Closer to Taxing Tech Giants​

MANILA (Reuters) - A proposed bill that will allow the Philippines to tax tech giants like Facebook <FB.O>, Alphabet's <GOOGL.O> Google and Youtube, and Netflix <NFLX.O>, moved a step closer to becoming a law after a lower house committee approved it on Wednesday.

The bill, which aims to raise 29 billion pesos ($590 million) to help fund government measures to fight the coronavirus, follows similar plans by other Southeast Asian countries to generate revenues from the most popular digital services. 

"If brick-and-mortar establishments, which are the hardest-hit by the pandemic, have to pay VAT, the giants of e-commerce should not be exempt," Congressman Joey Salceda, the bill's principal author, said in a statement.

The bill proposes value-added tax of 12% on digital services. It still needs to clear the lower chamber and a similar bill has been submitted to the Senate.

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

The Philippines is a growth area for big tech firms, with Filipinos among the heaviest social media users in the world.

Facebook, Google, Youtube, Netflix, Spotify <SPOT.N> and Alibaba's <BABA.N> Lazada did not immediately respond to requests for comment.

Tech giants are increasingly facing tougher fiscal regimes in Southeast Asia, whose regulators held talks last year on a region-wide effort to tax tech giants more. 

In May, Indonesia announced plans for VAT of 10% on digital products to boost revenues amid the pandemic. 

Thailand in June approved a draft bill requiring foreign digital service providers to pay VAT of 7%.