Poe rejects tax on online purchases

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Senator Grace Poe (FILE PHOTO)

Metro Manila (CNN Philippines, July 31) — Senator Grace Poe said she will not support the bill imposing value-added tax on digital transactions at the height of the pandemic.

Speaking to CNN Philippines' The Exchange, the lawmaker said the bill approved by the House of Representatives Committee on Ways and Means is ill-timed and could run counter to efforts to get businesses back on their feet.

"A lot of my colleagues have expressed their disapproval and I'm one of them particularly at this time when we are encouraging online platforms. Perhaps later on for the bigger companies, but the majority here in the country are MSMEs (micro, small, medium enterprises)," Poe said Friday. "The ones that will be affected are the startups, the smaller companies."

The House bill seeks to impose a 12 percent VAT on digital deals such as Netflix and Spotify transactions, online shopping finds via platforms like Shopee and Lazada, or even online advertisements, mobile app purchases, and e-learning courses. The Department of Finance estimated that the measure can add ₱10 billion in tax collections.

"I think taxing them at this time will not be very encouraging. Granted that it might add revenue to the government, but I don't think the productivity that would be decreased... is actually productive at this time," the senator added.

The bill defines value-added tax as an indirect tax which may be shifted or passed on to the buyer, transferee, or lessee of the goods, properties, or services.

RELATED: Palace clarifies: Online sellers earning below ₱250,000 a year won't need to pay tax, but must register with BIR

Poe said the VAT may run counter to the provisions of the Bayanihan to Recover as One bill, which provides stimulus to hardest-hit industries, specifically small-scale firms.

The government has been encouraging e-commerce transactions and even online payments to minimize contact and prevent the spread of COVID-19, while still helping workers and business owners make a living.