PAYMENT APPS EYED AS DIGITAL VAT COLLECTING AGENTS

FintechAlliance.ph is pitching to make online financial platforms the withholding tax agents for the proposed imposition of value-added tax (VAT) on digital transactions as they are already regulated by the government.

“Considering that such intermediaries (digital payment gateways) are currently better regulated compared to nonresident foreign entities and persons, it is more convenient if the said intermediaries can become the arm of the Philippine government in the collection of taxes,” the group of financial technology institutions said in its position paper.

But the private group stressed that there is a need “to ensure that these entities or persons are not too overburdened with compliance requirements so as to ensure good response from them.”

According to Philippines Fintech Report 2022, there are currently 216 fintech firms in the country, majority of which are lenders, payment solutions providers and e-wallets.

The fintech association made the statement amid the recent Senate ways and means committee hearing on the bill seeking to place 12-percent VAT on digital transactions.

Angelito Villanueva, its chair, said that the group was also backing the Bangko Sentral ng Pilipinas on its stance to exempt digital transactions and service fees collected by payment service providers of up to P500 from VAT.

Doing so would “incentivize both customers and players to further promote a sustainable digital economy,” he told the Inquirer.

The Bureau of Internal Revenue said it was crafting a system to collect VAT from foreign digital service providers. These include Amazon, Google, Netflix and Spotify.