The House of Representatives has recently passed a bill imposing a 12% VAT on “nonresident digital providers” which would include Netflix, Spotify, and other similar services. ACG Founding Chairman and Chief Tax Advisor Mon Abrea, in an interview with ANC, noted that the government should refrain from imposing new burdens on taxpayers.
Watch full interview: https://tinyurl.com/ANCRundown
Certainly, due to the high inflation, the government would need more funds, but the tax expert noted that, rather than simply passing the burden, the government needs to be more judicious of its budget and look into the proposed confidential funds as well as overpriced procurements.
Abrea also noted that the government should focus on collecting from the tech giants themselves.
The present VAT proposal would only burden the taxpayers and would only lead to a collection of P19-B. Abrea noted that this figure is very insignificant and that the government should focus on either studying the possibility of collecting more or prioritizing other policies like carbon tax or mining tax.
“At the very least, we need to feel the benefit from paying our taxes,” the tax expert noted.
The priority of the government, Abrea emphasized, should be to encourage and help the e-commerce industry. While the industry certainly enjoyed a temporary increase during the pandemic, it will need infrastructure and policies that will help strengthen them.
“I think we have the capacity to digitalize, but there needs to be prioritizing and setting a budget.”
Even if digitalization is included in the government roadmap, it would not be possible without a budget. There needs to be proper training of personnel, setting up of infrastructure, addressing potential issues on data privacy and security, and many other factors that need to be considered.
CEOs of tech giants should get ready for these changes. The Executive Tax Management Program of the Asian Consulting Group will help CEOs and business owners learn how to properly deal with these as well as educate themselves on game-changing strategies to handle BIR audits without compromises. Join the program through this link or scan the QR Code below.