VAT on digital services ‘not new tax’—Diokno

The Department of Finance (DOF) clarified that the imposition of value-added tax (VAT) on digital transactions only aims to ensure that everybody pays his fair share of taxes.

Finance Secretary Benjamin E. Diokno said the proposed VAT on electronic or digital services does not impose new taxes, noting that it only clarifies the imposition of consumption levy.

Diokno explained that digital advertising, subscription-based services, and other services using information communication technology (ICT)-enabled infrastructure, among others, were never been exempted from VAT.

Last Nov. 14, the House of Representatives approved on third and final reading a bill “Imposing Value-Added Tax on Digital Transactions in the Philippines,” or House Bill (HB) No. 4122.

“It is only right that we allow our businesses to operate on even ground, and this bill rightfully clarifies which digital services to tax,” Diokno said in a statement on Friday, Dec. 2.

“It is not fair to only tax traditional businesses like restaurants and retail stores, and not tax online platforms like Netflix,” he added.

However, Diokno noted that educational services such as online courses and webinars rendered by accredited private educational institutions are exempted from the imposition of VAT.

Digital service refers to any service that is delivered or subscribed over the internet or other electronic network.

Digital services cannot be obtained without the use of information technology and the delivery of such services may be automated.

Meanwhile, digital service providers (DSPs) provide digital services or goods to a buyer. This may be through operating an online platform for the purpose of buying and selling goods and services or by making transactions for the provision of digital services on behalf of any person.

HB No. 4122 will level the playing field between digital and traditional businesses, especially those that cannot shift to the digital platform.

This effectively treats businesses equally regardless of their nature.

Source: Manila Bulletin

DOF pursues real estate fiscal policy reforms

The Department of Finance (DOF) said the government will strengthen the development of the housing and real estate sectors in the country through fiscal policy reforms.

Finance Secretary Benjamin E. Diokno said that measures aimed at strengthening the pillars of support for the growth of the local housing and real estate will continue under the Marcos administration.

The DOF will continue in pursuing enactment of the Real Property Valuation and Assessment Reform bill—the third package of the comprehensive tax reform program of the previous administration, he said.

According to Diokno, the reform will boost investor confidence in the real property sector as it seeks to adopt the internationally accepted valuation standards and professional real property valuation.

Once passed into law, the proposed measure will promote the development of a just, equitable, and efficient real property valuation system that will positively impact revenue generation and resource mobilization performance of local government units (LGUs).

“A key feature of the proposed reform is the establishment of a comprehensive and up-to-date electronic database to support local governments’ valuation functions,” Diokno said.

The finance chief explained that an electronically accessible database will allow for the study of trends and other analyses to support land use planning and development.

“We will continue to strengthen the pillars of support for the growth of housing and real estate in the Philippines. Fiscal policy, in particular, has an important role to play in developing these sectors,” Diokno said.

Furthermore, the DOF, through its attached agency Bureau of Local Government Finance (BLGF), has continued to ramp up improvements to the bureaucratic efficiency of property-related tax collection in LGUs.

Diokno assured that the government is carefully monitoring the updating of real property tax base and rates in LGUs.

“[A]llow me to assure you that the Marcos administration stands firm in its commitment to grow the housing and real property sector,” he said.

Last Oct. 25, Diokno urged LGUs to strengthen their revenue mobilization capacities through real property tax collections in order to support the country’s economic resurgence.

Diokno noted that real property tax offers a progressive source of revenue for LGUs, thus they need a credible real property valuation system to help improve government’s revenue generation capacity.

Diokno also reiterated his call to LGUs for digitalization.

“In the new normal, we need to make sure that our fiscal position is stable enough to enhance our healthcare system, endure economic shocks, and continue to improve our public services through digitalization,” Diokno said.

Source: Manila bulletin