The fintech industry said it wants to be recognized as an emerging industry with some protections in a bill proposing to tax digital services.
“We fully understand that taxation is the lifeblood that sustains and nourishes every government. But we are likewise aware of its power to destroy emerging digital enterprises that are still at an embryonic stage in the Philippines,” Angelito M. Villanueva, chairman of Fintech Alliance.ph, said in a statement Sunday.
Mr. Villanueva was referring to House Bill No. 6765 or the proposed Digital Economy Taxation Act, which will impose a 12% value-added tax (VAT) on digital advertising, internet-based subscriptions, and transactions made on e-commerce platforms.
The bill could generate P27 billion in fresh revenue for a government pressed for cash during the pandemic, according to House Ways and Means Committee Chairperson and Albay Representative Jose Maria Clemente S. Salceda, who filed the bill.
Mr. Villanueva said the bill makes digital advertising and subscription-based services subject to VAT and requires foreign businesses to establish a local presence will “deter digital learning, innovation, and future-readiness.”
“It takes sustained capital intensive investments and a lot of time before digital goods and services become profitable,” he said.
In a position paper released Sunday, FintechAlliance.ph said the taxes proposed by the bill will serve as a “barrier” to substantial capital investment.
“Instead, the government should actually reward micro-, small, and medium enterprises in moving their products to online platforms.”
The group also wants a phased VAT implementation for domestic content or domestic online platforms.