Philippines Looks to Tax Online Businesses As It Searches for Revenue

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The booming Internet economy has caught the eye of Philippine authorities as the nation hunts for revenue amid the pandemic.

The Philippine tax agency has ordered all online businesses to register, declare past transactions, and pay correct taxes by end-July, according to a June 1 circular released Wednesday. Filipinos went to the Internet in droves to sell goods from food to masks as the quarantine that started in March devastated jobs and hurt incomes.

The virus outbreak has hurt the government’s fiscal health, with tax revenue sliding and spending surging, as officials try to boost an economy that the World Bank expects to contract this year. Finance Secretary Carlos Dominguez has pledged the budget deficit will not be allowed to widen beyond 9% of gross domestic product, out from 3.55% last year.

“Without funds in government coffers, we won’t have aid and we won’t be able to extend help while the threat of Covid-19 remains,” presidential spokesman Harry Roque said in a virtual briefing Thursday.

The Philippines joins other Southeast Asian countries in moving to tax online transactions. Thailand’s Cabinet approved a draft law this week seeking to impose value-added tax on overseas online services. Indonesian President Joko Widodo signed a rule in December that imposes a tax on e-commerce activities.

Dominguez on Monday backed a proposal in Congress to impose a VAT on sales done through the Internet.

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