The House of Representatives has approved the proposed measure imposing value added tax (VAT) on digital services provided by foreign-based companies.

During the hearing, members of the House Committee on Ways and Means approved the motion for approval made by Nueva Ecija Representative Ria Vergara.

“This will level the playing field,” said Albay Representative Joey Salceda, the panel’s chairperson.

“These companies earn income here and are paying taxes in their home countries,” he added. “I want to get our share of that. Otherwise, it would be disadvantageous to our local digital service providers which pay VAT,” he added.

Digital services include online licensing or software, updates and add-ons, website filters and firewalls, mobile applications, video games and online games, and webcasts and webinars.

It also includes the provision of digital content, such as music, files, images, text, and information; online advertising spaces; electronic marketplaces; search engine services; social networks; database and hosting; and online training.

According to Salceda, the VAT on non-resident digital service providers is expected to raise Php 9 billion in government revenues

However, for Gabriela party-list Representative Arlene Brosas, taxing such consumption-based services would also mean additional expenses to consumers.

“This (VAT) will be passed on to the consumers, and that is why we prefer that we tax corporations rather than consumption-based services,” Brosas said.

In his reply, Salceda said that these service providers “are already passing it on now when they pay VAT in other countries.”