Having passed both the Senate and the House of Representatives, the bill will become law if signed by President Ferdinand Marcos Jr., Bloomberg reported Friday (June 28).
The bill would impose a 12% value-added tax on foreign digital service providers and is expected to generate about 18 billion pesos (about $308 million) in its first year, according to the report.
The proposed tax aims to nurture Philippines-based streaming platforms, support the development of creative industries, and create a new source of revenue to help pay for the country’s growing budget, the report said.
The bill has been under consideration by lawmakers for four years, since the time of the pandemic, but it has gained momentum as the Philippines faces growing pressure to control its budget deficit, per the report.
The move comes at a time when Netflix and other streaming platforms are working to expand in the Philippines and other Southeast Asian countries, according to the report.
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Netflix said in 2022 that it was working to localize payment methods in the Asia-Pacific region to make subscriptions easier for people who want to pay using Unified Payments Interface (UPI), digital wallet and direct carrier billing.
“We accelerated this journey of diversifying payment methods nine months ago and the results have been impressive,” the company said at the time on its website, adding that it had added 16 new payment methods and seen the number of new subscribers signing up with an alternative payment method more than triple between 2020 and 2021.
In April, when reporting its first-quarter earnings, Netflix said it has nearly 270 million paying customers globally and had seen a 15% year-over-year surge in revenue.
The growth not only reaffirmed Netflix’s dominance in the streaming industry but also reflected a broader global shift away from traditional broadcast television toward on-demand content consumption, PYMNTS reported at the time. The company’s addition of 9.3 million paid subscribers in the first quarter alone underscored the increasing demand for premium, personalized entertainment offerings.
