digital economy – Author Carlo Carrasco

President Marcos signs into law VAT on foreign digital services

October 10, 2024October 2, 2024carlocarrasco

Foreign entities that provide digital services to their customers here in the Philippines will have to pay their fair share of taxes as President Ferdinand “Bongbong” Marcos, Jr., recently signed into law Republic Act Number 12023 (RA12023) which imposes the 12% value-added tax (VAT) on foreign digital service providers (DSPs), according to a Philippine News Agency (PNA) news article.

To put things in perspective, posted below is an excerpt from the PNA news article. Some parts in boldface…

President Ferdinand R. Marcos Jr. signed into law on Wednesday a measure imposing a value-added tax (VAT) on foreign digital services providers (DSPs).

A priority measure of the administration, Republic Act (RA) 12023 imposes a 12 percent VAT on foreign DSPs, such as Netflix, Disney, and HBO, to generate additional revenue for the government.

In his message, Marcos said the new law would level the playing field for local providers.

“If you are reaping the rewards of a fruitful digital economy here, it is only right that you contribute also to its growth. After all, whether you are a small tech startup or a global tech giant based halfway around the world, if you are making money here in the Philippines, you’re a part of our community, and with that comes a shared responsibility,” Marcos said.

According to the President, about PHP105 billion in revenue is expected to be collected in the next five years due to RA 12023.

The amount is enough to build 42,000 classrooms, more than 6,000 rural health units, and 7,000 km of farm-to-market roads, the Chief Executive noted.

Additionally, 5 percent of the revenues generated by the law will be allocated to the local creative industry.

“This means our artists, filmmakers, musicians, the very people who fill our platforms with storage and the content, will directly benefit. It ensures that our creative talents are not just surviving in a competitive digital market, but will be allowed by fairness and progress,” Marcos said.

The President thanked the legislators for passing the measure even as he called on companies covered by the law to support and heed the rules of the Act.

‘Fair and square’ tax policies – Senator Sherwin Gatchalian, meanwhile, said the new law is expected to address revenue losses by clarifying the taxability of non-resident digital service providers and addressing the ambiguity in the previous law.

“We believe in the importance of creating an environment where our digital services providers, whether they are nonresident or local, operate under fair and square tax policies,” Gatchalian said in a statement. He said the new measure does not mean a new tax imposition.

Let me end this post by asking you readers: What is your reaction to this recent development? Do you think the new law will be good for the economy of the Philippines? Do you think that the foreign digital service providers will somehow raise the subscription rates and fees for their customers here in the Philippines in response to the new law?

You may answer in the comments below. If you prefer to answer privately, you may do so by sending me a direct message online.

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Thank you for reading. If you find this article engaging, please click the like button below, share this article to others and also please consider making a donation to support my publishing. If you are looking for a copywriter to create content for your special project or business, check out my services and my portfolio. Feel free to contact me with a private message. Also please feel free to visit my Facebook page Author Carlo Carrasco and follow me on Twitter at @HavenorFantasy as well as on Tumblr at https://carlocarrasco.tumblr.com/ and on Instagram athttps://www.instagram.com/authorcarlocarrasco

For more South Metro Manila community news and developments, come back here soon. Also say NO to fake news, NO to irresponsible journalism, NO to misinformation, NO to plagiarists, NO to reckless publishers and NO to sinister propaganda when it comes to news and developments. For South Metro Manila community developments, member engagement, commerce and other relevant updates, join the growing South Metro Manila Facebook group at https://www.facebook.com/groups/342183059992673

More than P783 million deposited through BSP’s coin machines

July 4, 2024June 26, 2024carlocarrasco

Over P783 million worth of coins have been deposited through the many coin deposit machines (CoDMs) of the Bangko Sentral ng Pilipinas (BSP) as of June 23, 2024, as published on their website.

Based on the latest statistics, a total of P783,628,810.29 (10.7% higher than the previous month’s count of P707,661,554.41) in coins got deposited into BSP machines on 191,804 transactions (9.8% higher than the previous month’s 174,656 transactions) from customers. In terms of physical quantity, 211,689,731 in coins were deposited. The previous count of deposited coins was 193,901,254.

Doing the math on the latest statistics, customers averaged P4,085.57 per transaction (versus the previous month’s P4,051.74 per transaction) at the machines. As for the grand total Peso amount divided by the number of coins deposited, the average is P3.7018 per coin deposited (versus the previous month’s average of P3.6496 per coin deposited).

Let me end this piece by asking you readers: What is your reaction to this recent development? Were you able to deposit your excess coins into a BSP coin deposit machine in your locality recently? How long did you have to wait in line before depositing your coins at the BSP machine?

You may answer in the comments below. If you prefer to answer privately, you may do so by sending me a direct message online.

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For more South Metro Manila community news and developments, come back here soon. Also say NO to fake news, NO to irresponsible journalism, NO to misinformation, NO to plagiarists, NO to reckless publishers and NO to sinister propaganda when it comes to news and developments. For South Metro Manila community developments, member engagements, commerce and other relevant updates, join the growing South Metro Manila Facebook group at https://www.facebook.com/groups/342183059992673

BIR clarifies that small online sellers are exempted from 1% withholding tax

February 6, 2024January 30, 2024carlocarrasco

In response to growing concerns related to the recent implementation of the 1% withholding tax on online merchants with annual earnings of over P500,000, the Bureau of Internal Revenue (BIR) clarified that small online sellers are exempted from it, according to a BusinessWorld news report.

To put things in perspective, posted below is an excerpt from the BusinessWorld news report. Some parts in boldface…

THE BUREAU of Internal Revenue (BIR) on Monday clarified that small online sellers are exempted from the payment of the creditable withholding tax imposed on online marketplaces but would still need to register their business.

“Small-scale online sellers are exempted from withholding tax. The BIR is sympathetic to small businesses in its approach to taxing online sellers/merchants,” BIR Commissioner Romeo D. Lumagui, Jr. said in a statement.

BIR Revenue Regulations No. 16-2023, which took effect on Jan. 11, imposes a withholding tax of 1% on one-half of the gross remittances by e-marketplace operators and digital financial service providers to the sellers or mer-chants for the goods and services paid or sold through their platforms or facilities.

The BIR said that the withholding tax is not imposed if the annual total gross remittances to an online seller for the past taxable year has not exceeded P500,000; if the cumulative gross remittances to an online seller in a taxable year has not yet exceeded P500,000 or if the seller is duly exempt from or subject to a lower income tax rate pursuant to any existing law or treaty.

“For those who are above the threshold of P500,000 annual gross remittance, it is only fair that they will be subjected to withholding tax. We have to be fair to the retail sector and brick and mortar stores who are regularly pay-ing their taxes,” Mr. Lumagui said.

The tax covers marketplaces for online shopping, food delivery platforms, platforms to book lodging accommodations, and other similar online service or product marketplaces.

E-marketplace operators and digital financial service providers were given a 90-day transitory period to comply with the order.

The BIR in a separate circular said all online sellers and merchants need to register with the BIR and submit documentary requirements, even if their annual gross remittance is below the P500,000 threshold.

The circular also noted that sellers and merchants are not allowed to receive payments through a personal account and instead must use a BIR-registered account.

“If you have a business, you have to register and pay your taxes. It doesn’t matter if it’s an actual store or an online store. It is your responsibility to pay taxes like everyone else,” Mr. Lumagui said.

In a press conference last week, Mr. Lumagui told reporters that the measure will help the BIR better gauge the impact of the digital economy.

“We gave the online platforms a grace period of 90 days. With that, we are still checking on which are already capable of complying… During our discussions with online platforms, they’re cooperative. With this development, we’re hoping to get the entire picture on online transactions,” he said.

In 2022, the digital economy contributed P2.08 trillion or equivalent to 9.4% of the gross domestic product.

A report by Google, Temasek Holdings and Bain & Company showed that the Philippines’ digital economy is projected to reach as high as $150 billion by 2030.

The BIR also earlier clarified that the withholding tax is not a “new” tax as it is just a measure that will allow for an advance payment of income tax.

Let me end this piece by asking you readers: What is your reaction to this recent development? Do you think the newest clarification made by the BIR will end the confusion or concerns regarding the 1% withholding tax? If you are aspiring to sell items online, does the 1% withholding tax discourage you?

You may answer in the comments below. If you prefer to answer privately, you may do so by sending me a direct message online.

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Philippine economy grew by 5.6% in 2023

February 3, 2024January 31, 2024carlocarrasco

The results are finally in. The economy of the Philippines grew by 5.6% for the year 2023 and this was short of the government’s own declared target of 6% to 7%, according to a GMA Network news report.

To put things in perspective, posted below is an excerpt from the GMA news report. Some parts in boldface…

The Philippine economy grew slower at 5.6% in year 2023, falling short of the government’s target as elevated interest rates resulting from high inflation environment dampened consumption, according to data released by the Philippine Statistics Authority (PSA) on Wednesday.

The economy, as measured by gross domestic product (GDP) or the total value of goods and services produced in a period, grew by 5.6% from October to December 2023, PSA chief and National Statistician Claire Dennis Mapa said at a press conference.

This is slower than the 7.1% growth rate seen in the fourth quarter of 2022. It is also a deceleration from the upwardly revised third quarter 2023 GDP growth rate of 6%.

The fourth quarter economic performance brought the full-year 2023 economic growth rate to 5.6%, slower than the 7.6% full-year 2022 GDP growth.

This is below the government’s target range of 6% to 7% for 2023’s full-year GDP growth.

“While this growth is below our target of 6 to 7% for this year, this keeps us in the position of being one of the best-performing economies in Asia,” National Economic and Development Authority (NEDA) Secretary Arsenio Balisacan said during the press briefing.

Comparing the growth rates of neighbors in the region, the Marcos administration’s chief economist said the Philippines’ fourth quarter growth surpassed that of China (5.2%) and Malaysia (3.4%) while falling behind Vietnam (6.7%).

“More importantly, our full-year GDP for 2023 is now 8.6% higher than pre-pandemic levels,” Balisacan said.

High inflation, interest rates – The NEDA chief said the slowdown seen in 2023 could be attributed “possibly to effects of past interest rate increases.”

The Bangko Sentral ng Pilipinas’ policy-setting Monetary Board has raised the benchmark interest rate by 450 basis points since May 2022 to temper inflation, which resulted from global supply disruptions and economic uncertainty following Russia’s full-scale attack and invasion of Ukraine since February 2022.

Notably, the Philippines’ full-year inflation — which measures the rate of increase in the prices of goods and services — accelerated to 6% from 5.8% in 2022.

“The impact of inflation is on Household final consumption expenditure. We saw the impact on food expenditure… directly affected by inflation,” Mapa said.

Spending on food for the whole year grew at 8.1%, slower than 12.4% in 2022.

“We are concerned about the low growth in real spending on food due to high food prices, though it has moderated in recent months,” Balisacan said.

Meanwhile, household final consumption expenditure decelerated to 5.3% from 7% in the previous quarter in 2022.

For the whole year, household spending slowed down to 5.6% from 8.3% in 2022.

“The government will be relentless in managing inflation, especially for basic commodities such as food. Our efforts include improving the efficiency and building resiliency of the agriculture value chain, utilizing strategic trade policy when domestic production is inadequate, and establishing mechanisms to empower consumers to exercise their market power to combat inflation,” Balisacan said.

Likewise, government final consumption expenditure contracted by 1.8% in the fourth quarter, from 3.3% growth in the same period in 2022.

Full year, government spending grew 0.4%, slower than the 4.9% growth in 2022.

Balisacan said the decline in state spending last year was “largely due to the fiscal consolidation program.”

Let me end this piece by asking you readers: What is your reaction to this recent development? Do you think 2024 will be a better year of growth for the Philippine economy? Do you think more government spending will boost economic growth without adding much to inflation?

You may answer in the comments below. If you prefer to answer privately, you may do so by sending me a direct message online.

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BIR admits taxing social media influencers is difficult

November 7, 2023November 3, 2023carlocarrasco

As far as the Bureau of Internal Revenue (BIR) is concerned, implementing taxes on social media influencers and collecting from them are still hard to do, according to a Philippine Star news report.

To put things in perspective, posted below is an excerpt from the Philippine Star news report. Some parts in boldface…

The Bureau of Internal Revenue (BIR) continues to have difficulty in making social media influencers comply with the country’s tax laws even amid a widening adoption of various social media platforms as a form of income.

BIR Assistant Commissioner Jethro Sabariaga said the country’s largest revenue collecting agency remains in dialogue with social media influencers for them to pay their tax obligations to the government.

The BIR decided to seek a dialogue with the influencers in March this year. Sabariaga admitted that it is difficult for the BIR to get revenues from the digital space.

“Yes, (it is difficult). We will not mince with words. It might take some time, but that’s what we’ve been doing,” Sabariaga said.

“We are trying to win their side in the engagement process. The more that you can ask them to do voluntary compliance, the better rather than to fight with them,” he said.

BIR defines social media influencers as people whose digital posts are being monetized, classifying them as self-employed individuals or persons engaged in trade or business as sole proprietors.

The BIR earlier said it was looking into some 250 top earning social media influencers to see if they have been paying their obligations.

Based on BIR’s circular, influencers are required to pay income tax and percentage tax or value-added tax, if applicable, as mandated by the Tax Code.

According to the BIR, influencers derive their income from YouTube, sponsored social and blog posts, display advertising and affiliate marketing, among others.

Let me end this piece by asking you readers: What is your reaction to this recent development? Do you agree with the BIR’s plan to tax social media influencers? Is your favorite vlogger or YouTuber based in the Philippines who might have made some revenue online based on his or her output?

You may answer in the comments below. If you prefer to answer privately, you may do so by sending me a direct message online.

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Imposition of withholding tax on online sellers could happen before December 2023

November 2, 2023October 31, 2023carlocarrasco

Those of you who have been engaging with online selling, you better brace yourselves as the Bureau of Internal Revenue (BIR) hopes to begin imposing a creditable withholding tax before December 2023, according to a BusinessWorld news report. Specifically, this move applies on partner-merchants of online platforms.

To put things in perspective, posted below is an excerpt from the BusinessWorld news article. Some parts in boldface…

THE BUREAU of Internal Revenue (BIR) is hoping to start imposing a creditable withholding tax on partner-merchants of online platforms before the start of December, an official said.

“The process could be shorter, and we might just come up with it before the start of December. It will not be unreasonable to expect it before the start of December,” BIR Assistant Commissioner Jethro M. Sabariaga told reporters on the sidelines of the SGV Tax Symposium last week.

“The longer you withhold this release, you’re hobbling a significant portion of today’s economic transactions,” he added.

The BIR last week released the final draft of the amendments to Revenue Regulation No. 2-98 which currently does not cover income payments by online platform providers.

Under the final draft, the BIR would impose a withholding tax of 1% on one half of the gross remittances by domestic e-marketplace operators to the online merchants for the goods or services sold through their facility.

However, the withholding tax will not apply if annual total gross remittances to an online merchant for the past taxable year has not exceeded P250,000, or if the cumulative gross remittances to an online merchant in a taxable year has not yet exceeded P250,000.

Also exempted are online merchants who are part of a cooperative duly registered with the BIR with a valid Certificate of Tax Exemption.

Mr. Sabariaga said the BIR took note of the suggestions and objections to the draft rules raised by affected sectors. The BIR’s deadline for comments from stakeholders on the final draft ended on Oct. 27.

“This will all be taken into consideration and then be studied and then the final draft will be released and exposed,” he said.

Since then, Mr. Sabariaga said the agency consulted with various industries to come up with the latest version of the draft.

“It’s the first exposition of the draft, you have to consider the various industries, the applicability of the withholding (tax) on the various industries, the rates, the economic provisions of it,” he added

The BIR has been seeking ways to tax the digital economy, particularly as e-commerce surged during the pandemic.

In 2022, the digital economy contributed P2.08 trillion, equivalent to 9.4% of gross domestic product. Of this, e-commerce had the highest growth at 26.5%, with its share to the economy reaching 20% or P416.12 billion.

Let me end this piece by asking you readers: What is your reaction to this recent development? If you have been regularly selling online, do you think you will be covered by the planned withholding tax by the BIR? Do you have all financial and legal records prepared?

You may answer in the comments below. If you prefer to answer privately, you may do so by sending me a direct message online.

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