Philippines to Netflix, Max: Want to Operate Here? Prepare to Pay a 12% Tax

The Philippines is looking to raise some cash by taxing international digital services, including streaming services and search engines.

As of 2023, Filipinos spent almost a third of their day on their phones, but many of the services they use are not based in the Philippines and are not subject to a 12% value-added tax (VAT) currently paid by local services. That's set to change with a new law that extends the local tax structure to foreign companies, according to Global VAT Compliance.

It applies to streaming services like Netflix, Max, and Disney+ and nearly any online purchase. Shopping sites like Shein will also be subject to the tax, as will search engines and cloud providers, which could include Amazon and Google.

"If you are reaping the rewards of a fruitful digital economy here, it is only right that you contribute also to its growth," says Philippine President Ferdinand Marcos Jr., Bloomberg reports.

Foreign digital services companies over a certain size will now have to register with the Bureau of Internal Revenue (BIR), and appoint a local representative to manage their tax obligations in the country. If they fail to comply, the Philippines could suspend their services.

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The taxes are expected to raise $1.4 billion over the next four years to go toward government projects and infrastructure. It could also help grow regional streaming services, such as Hong Kong-based Viu, to compete with American tech giants, according to FirstPost.

Three years ago, Korean ISP SK Broadband also attempted to tap Netflix for funds after it said the popularity of Squid Game led to excessive data usage. The two settled last year.

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