House Ways and Means Committee Chairman, Albay Rep. Joey Sarte Salceda said the Philippine creatives sector, including artists, artisans, and producers, stands to gain the most from the VAT [Value Added Taxes] law on foreign digital services, which was signed by President Marcos on Tuesday.
The principal author of the measure in the House of Representatives, Salceda commended the President for enacting Republic Act 12023, which addresses the disparity between domestic and foreign creatives.
“The Philippine creatives sector — artists, artisans, producers — are the biggest winners in this law,” he said. RA 12023 imposes a 12 percent VAT on foreign digital services providers or DSPs, such as Netflix, Disney, and HBO, to generate additional revenue for the government.
Salceda added that prior to the law, foreign companies in the digital space were able to sell products to Filipino consumers without the 12-percent VAT burden, creating an uneven playing field for local artists and producers.
“For the longest time, our VAT system has taxed domestic creatives while allowing foreign companies to sell to Filipinos without any tax. This meant that our local creatives sector was competing with their hands tied behind their backs while foreigners had full access to our market,” he said, adding that the law ends this unfair treatment and will generate between PHP8 billion to PHP12 billion in its first year, with the executive branch projecting even higher revenues. He said the 5-percent revenue share earmark for the Philippine creatives industry over the next decade could be a potent source of growth for the country.
Salceda compares the new law’s value to South Korea’s investment initiatives in its cultural sector following the 1997 Asian financial crisis and the 2008 global recession, suggesting that the Philippines can similarly boost its creatives industry with targeted support.
“The Philippines is ASEAN’s largest creatives sector exporter, and we have an absolute advantage in this field due to our culture, traditions, predisposition, and multilingual society. It is time we invest heavily in this sector,” he stressed.