Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City

EIGHTEENTH CONGRESS
First Regular Session

House Bill No._ 5944

Introduced by Representative Sharon S. Garin

EXPLANATORY NOTE

While the State recognizes the vital role of information and
communication in the nation-building, the opportunity to regulate and raise
revenue must always be given priority.

Digital taxation is not new to Asian countries. Digital taxation has been
early introduced in Europe region while Singapore and Malaysia followed
‘such fiscal policy.

With the end view of regulating, monitoring, and at the same time
‘supplementing the government coffers, imposing digital taxation to all kinds of
digital service providers should complement the depleting government funds
caused by COVID-19 pandemic.

This measure seeks to raise revenue from digital service providers,
whether local or foreign service providers. A digital tax of 6% of its gross sales
to the consumers in the Philippines will be imposed to every digital service
providers.

Every digital service providers are required to be registered with the
Bureau of Internal Revenue (BIR) and only service providers with more than
P3 Million gross sales are required to remit the 6% digital tax. Digital Service
Returns will be filed by the registered digital service providers every quarter of
the year for purposes of monitoring and revenue collection.

In view of the foregoing, immediate passage of this bill is earnestly
‘sought for.

|. GARIN
Partylist — IBIS-OWA


Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City

EIGHTEENTH CONGRESS
First Regular Session

House BillNo._"__ 8944

Introduced by Representative Sharon S. Garin

IN ACT
ESTABLISHING DIGITAL TAXATION IN THE PHILIPPINES

Be it enacted by the Senate and House of Representatives of the
Philippines in Congress assembled:

SECTION 1. Short Title. - This Act shall be known as “The Digital
Taxation Act.”

SEC. 2. Declaration of Policy. - The State, at all times, recognizes the
vital role of communication and information in nation-building. Towards this
end, the State may opt to source out much-needed revenues from the ever
fast growing industry of information and technology to sustain the lifeblood of
the government especially during this time of crisis.

SEC. 3. Definition of Terms. - The following terms shall be defined as

follows:

(1) Digital Services shall mean any service that is delivered or
subscribed over the internet or other electronic network and
which cannot be obtained without the use of information
technology and where the delivery of the service is essentially
automated. Digital services shall include, but not limited to,
online licensing of software, updates, and add-ons website
filters and firewalls; mobile applications and video games;
provision of digital content like music, files, images, text and
information; advertisement platform like provision of online


advertising space on intangible media platform; online platform
like offering platform to trade products or services; search
engines services; social networks; database and hosting like
website hosting, online data warehousing, filesharing and cloud
storage services; internet-based telecommunication; online
training like provision of distance teaching, e-learning, online
courses and webinars; online newspapers and journals
subscription; and payment processing services.

(2) Digital Service Provider (DSP) shall mean any person or
entity, whether local or foreign service provider, giving,
providing or rendering digital service or services to a consumer
based in the Philippines through operating an online platform
for purposes of buying and selling goods or services or by
making transactions for the provision of digital services on
behalf of any person.

(3) Consumer shall mean any person who acquires taxable digital
services in the Philippine from a local service provider or a
foreign service provider. A person is a prim facie consumer of
digital service by fulfilling any of the two of the following:

a. Makes payment for digital services using credit or debit facility
provided for by any financial institution or company in the
Philippines.

Acquires digital services using an internet protocol address

registered in the Philippines or an international mobile phone

s

country code assigned to the Philippines.
c. Resides in the Philippines.

SEC. 4. Digital Tax. - Effective January 1, 2021, all digital service providers
shall be charged and levied with six percent (6%) of its gross sales on its
digital services rendered in the Philippines-based consumers:

SEC. 5. Registration and Filing of Returns. — If the value of the digital
services provided for by the providers exceeds Three Million Pesos


(P3,000,000.00) for a year, such service provider shall be required to register
to collect and remit to the Philippines’ tax authority.

Once registered, affected service providers shall submit service tax returns
‘once every three (3) months. Returns must be filed online by the service
providers once they have registered in the Bureau of Internal Revenue (BIR)

system. It shall compute its annual turnover by including the value of di
services it make to consumers in the Philippines and the value of its digital
services made by foreign service providers through its platform to consumers
in the Philippines.

SEC. 6. Implementing Rules and Regulations. — To carry out the provisions
of this Act, the implementing rules and regulations shall be promulgated by
Department of Finance (DOF), upon the recommendation of the BIR and in
coordination with the Department of Information and Communication
Technology (DICT) not later than ninety (90) days after the approval of this
Act.

SEC. 7. Separability Clause. - Should any provision of this Act or any part
thereof be declared invalid, the other provisions, so far as they are separable
from the invalid ones, shall remain in force and effect.

SEC. 8 Repealing Clause. — All law, decrees, orders, and issuances, or
portions thereof, which are inconsistent with the provisions of this Act, are
hereby repealed, amended or modified accordingly.

SEC. 9. Effectivity. - This Act shall take effect fifteen (15) days after its
publication in the Official Gazette or in at least two (2) newspaper of general

circulation.

Approved,