The Philippines is set to implement a 12% value-added tax (VAT) on digital services provided by major technology companies, including Amazon, Netflix, Disney, and Alphabet. This decision aims to create a more equitable environment for local businesses, as stated by the internal revenue agency on Thursday.

President Ferdinand Marcos Jr. enacted the law on Wednesday, which mandates VAT on non-resident digital service providers, encompassing streaming platforms and online search engines.

"This initiative will foster fair competition among businesses benefiting from consumers in the Philippines. A balanced marketplace leads to improved products and services," remarked Bureau of Internal Revenue Commissioner Romeo Lumagui in a statement.

Currently, only local digital service providers are required to pay the 12% VAT, according to the agency.

A spokesperson for Netflix in the Asia-Pacific region indicated that the company has no comment at this time. Meanwhile, Disney, Google, and Amazon have not responded to inquiries for their perspectives.

The government projects to generate 105 billion pesos (approximately $1.9 billion) from the VAT between 2025 and 2029, with plans to allocate 5% of this revenue to support initiatives for the creative industries in the Philippines, as noted by the presidential communications office.

Additionally, the office mentioned that educational and public interest services will be exempt from the VAT.

The revenue agency clarified that digital services offered by foreign companies are deemed to be provided in the Philippines if they are consumed within the country.

Since the onset of the pandemic, technology giants have seen increased usage in Southeast Asia, although they are also encountering more rigorous fiscal tax regulations.