DoF starts study on digital tax leakages

THE Department of Finance (DoF) has initiated a study that would determine how the government can capture tax leakages from digital services, according to its chief.

“We have started the study on improving our tax collections on video streaming [and] on commerce conducted through the internet,” Finance Secretary Carlos Dominguez 3rd told lawmakers at a Senate hearing on Wednesday.

He admitted that the government had no idea of the total amount of transactions generated through these digital services. He SAID HIS DEPARTMENT WAS fiGURING out how to implement the government’s tax collection program on these platforms.

“So right now, our team from the BIR (Bureau of Internal Revenue) and DoF is working very hard to determine this — the way to tax transactions that are supposed to be taxed, that are escaping taxation because they are on the internet,” the Finance chief added.

Citing the transactions made over Lazada as an example, Dominguez said goods purchased through the online shopping app did not charge value-added tax (VAT).

“IF YOU BUY [A] flOOR POLISHER from the store, you pay a VAT, but if you buy it from Lazada, there is no VAT charge,” he said.

Besides online shopping apps, Dominguez also said his department would also look into the amount of transactions done through online streaming.

The DoF head made this statement a day after he expressed

openness to taxing digital services, such as video and music streaming APPS LIKE NETflIX AND SPOTIFY.

He has said Albay Rep. José María Clemente “Joey” Salceda’s PLAN TO fiLE A BILL FOR THE TAX MEAsure is “something to seriously consider.”

The government has cut its revenue collection goal to P2.61 trillion for this year, lower by P560.5 billion or 17.7 percent than the P3.17-trillion program approved by the inter-agency Development Budget Coordination Committee on March 27.

The revised target is equivalent to 13.6 percent of the country’s overall gross domestic product.