The public may expect minimal price increase in their monthly subscriptions following the signing of the law imposing value-added tax on foreign digital service providers, Bureau of Internal Revenue (BIR) Commissioner Romeo Lumagui Jr. said on Wednesday.
At a Palace press briefing, Lumagui was asked if consumers could experience price increase in their monthly subscriptions following the signing of the new law. He said this would depend on the service providers, noting that this will only be minimal once they decide to increase the fees.
”As to whether magkakaroon ng price increase, it does not necessarily follow… of course, it will also depend… it’s a business decision by the service providers but again, nag-aano naman ‘yan eh, nagbabayad naman talaga dapat sila from the very beginning so they should have incorporated that,” Lumagui said.
”Puwedeng magkaroon ng price increase but again I think it would be minimal. hindi naman ‘yan 12% automatically magi-increase sila, also commensurate the same rate,” he added.
Lumagui expressed confidence that the non-resident digital service providers would control the price increase in order not to lose subscribers.
”So, in the end if they will increase their prices by so much they will also lose their customers at the same time – so, I’m sure they will not do that, it’s not a wise business decision that’s why they will also implement and they will also control their price increase because they will lose subscribers. So, in that sense, that’s economics working as a protection of the prices,” he explained.
According to Lumagui, the public should not be concerned about this new law as this will equalize the playing field between registered and paying digital service providers as well as the foreign ones.
Marcos signed Republic Act No. 12023 or the VAT on Digital Services Act Wednesday morning. The President noted that no new tax has been imposed following the signing of the law.
Lumagui said the new law strengthens the BIR’s authority to collect value-added tax on digital transactions and clarifies how the DSPs can comply with the VAT requirements imposed under the National Internal Revenue Code.
”This is a welcome support for the bureau’s efforts to collect what is due to the government. Digital service providers render services subject to value-added tax during their trade or business much like their counterparts in the brick-and-mortar’s establishments,” he explained.
”This law promotes fair competition ensuring that both local and foreign DSPs compete on equal footing, and in doing so, we create a more competitive market place where consumers will ultimately benefit from improved services and fairer pricing,” he added.
The Department of Finance, said with the VAT on foreign digital service providers in place, it expects to collect P102.12 billion from 2025 to 2029.—AOL, GMA Integrated News
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