Salceda: Digital services tax targets foreign corporations, not MSMEs

House Ways and Means Committee Chairperson Joey Salceda said that the proposed measure to tax companies providing goods and services via digital and electronic platforms was not created to burden micro, small, and medium enterprises (MSMEs) but was only meant for non-resident foreign corporations.

Salceda clarified that no new taxes were being imposed, and the proposal to impose value-added tax (VAT) would be for non-resident foreign corporations.

“There’s no new tax being imposed. Anybody who is not exempted is presumed to be covered by the VAT Law,” he said in an interview on The Howie Severino Podcast.

“Pero para mas klaro, ito pong batas na ito is for non-resident foreign corporations. Obviously, itong mga maiingay, hindi naman ho sila non-resident. Definitely, they're not foreign. So basically, ang habol ko rito Facebook, Google, na kumita ng P54 billion noong 2021,” he added.

(Just to make it clear, this law is for non-resident foreign corporations. Obviously, those who are complaining the loudest, they aren't non-residents. Definitely, they're not foreign. So basically, who I'm after here is Facebook, Google, that made about P54 billion in 2021.)

He emphasized that he supported and wanted small businesses to grow.

Salceda earlier filed a measure seeking to subject digital services like Netflix, Spotify, and Lazada to taxation which he said would generate the government as much as P29.1 billion yearly in incremental revenues.

He proposed the "Digital Economy Taxation Act of 2020," which aims to "capture the value created by the digital economy better in the country's tax system.”

He said the measure does not seek to burden small businesses and the public but imposes taxes where it is due, particularly on big companies such as Netflix and Spotify.

“This is just a matter of common tax sense. If brick-and-mortar establishments, which are the hardest hit by the COVID-19 pandemic, have to pay VAT, the giants of e-commerce shouldn’t be exempt. In general, if you sell, you pay VAT, unless you fall under the exemptions for small businesses,” Salceda said.

“If your sales are below P3 million, you are exempt from paying or filing VAT. If your net income as a sole proprietor is below 250,000, you are exempt from paying and filing income taxes. So, the small Facebook online seller will not be taxed, I guarantee you.” Salceda added. — DVM, GMA News