VAT impact on Netflix, other services felt by 2025

MANILA, Philippines — Consumers will likely feel the impact of the value-added tax (VAT) on foreign digital service providers in the first quarter of 2025, according to the Bureau of Internal Revenue (BIR) which stressed there is no guarantee from government that subscription costs will not increase.

The new VAT covers video streaming such as Netflix, Viu, Prime Video and HBO, as well as music streaming like Spotify and Apple Music, service vendors iTunes Store and Google Play, and video games like Activision and Nintendo.

“In other countries, they are paying their taxes. We are already late in the game. But of course, it is not guaranteed that there will be no price increase,” BIR Commissioner Romeo Lumagui said at a briefing.

President Marcos has enacted into law the imposition of a 12-percent VAT on all digital services consumed in the Philippines. At present, only local digital service providers are subject to 12 percent VAT.

“We coordinated with the companies and they know their responsibility and they will comply. But we cannot say if they will increase their prices,” Lumagui said.

But any increase, Lumagui pointed out, will not be equivalent outright to 12 percent as any hike will depend on specific digital service providers.

He stressed any price hike will not be immediate as there will be a 90-day period for the crafting of the implementing rules and regulations (IRR).

“There will also be an extension of up to 120 days after the IRR since we need systems development at the BIR for them to register and pay,” he pointed out. “So it will likely be early next year.”

BIR Assistant Commissioner Jethro Sabariaga said they have yet to make a computation of the full impact of the new law, pending the release of the required IRR.

Sabariaga clarified that digital service providers can absorb a 12-percent VAT.

For example, a basic plan on video streaming platform Netflix costs P249 per month. If it is subject to a 12-percent VAT, the plan could increase by almost P30.

“That’s how VAT works. But we don’t know if there will be other computations, etc. We don’t have the IRR yet,” Sabariaga said in a Viber message.

“They can absorb but it will depend on their decision