The chair of the Ways and Means Committee of the Philippine House of Representatives has introduced legislation that would impose VAT on digital services provided by multinational companies.

On 19 May 2020, Rep. Joey Salceda introduced H.B. 6755, which he said would clarify that "digital advertising by internet giants such as Google and Facebook and subscription-based services such as those of Netflix and Spotify" are subject to the Philippines’ 12% VAT. The bill would, "once and for all, set a statutory clarification of a long-standing question of whether services rendered electronically can be subjected to VAT," Salceda said in the explanatory note submitted with the legislation. He said the VAT would apply to services rendered electronically during a trade or business.

The legislation would also make "network orchestrators for lease services such as Airbnb" and electronic commerce platforms "such as Lazada and Shopee" withholding agents for VAT.

Salceda said ride sharing and delivery service companies like Grab and Angkas would also become withholding agents for income tax purposes "to ease their partners of the burden of having to pay their own taxes, while also encouraging tax compliance."

To address the issue of companies with a significant presence but no physical establishment in the Philippines not being liable for tax and regulatory purposes, Salceda said the bill would require any party rendering digital services in the country to do so through a local resident agent or representative office.

On Facebook, Saleda posted the following: "Simply put, these are not new taxes,". "These are tax administration measures that we hope will capture the value more fairly, especially when local businesses are struggling due to COVID-19 and there are these companies that are making a killing because of isolation, but are not paying enough taxes."

In a further development on 19 May Sen. Ramon "Bong" Revilla introduced PS Resolution 410, urging the Senate Committee on Ways and Means to conduct an inquiry into the possibility of collecting taxes from multinational streaming services and the digital economy in general. "We need to embrace the digital revolution of our time, and to comprehensively review and update our existing tax laws regarding [the] digital economy," Revilla said.

Revilla noted that while local online businesses are already subject to tax, multinational corporations with more sophisticated technological capabilities but without a physical presence in the country might not be "properly taxed, given the outdated provisions and leakages in our tax measures."