Finance Secretary Ralph Recto. Photo by Geremy Pintolo
MANILA, Philippines — Finance Secretary Ralph Recto said the Philippines would not exempt American technology giants from the 12 percent digital value-added tax (VAT) already in place, dismissing concerns that US President Donald Trump’s tariffs could force a policy shift.
Recto told reporters that Manila could not recalibrate tax policy around uncertain trade actions, even as Trump’s protectionist turn has unsettled allies and put pressure on smaller economies to adjust.
READ: BMI: Trump pressure to test Marcos’ tech tax
“I don’t give it much importance as of now,” Recto said of the US leader’s remarks.
“We don’t even know how serious they are on any of that. There have been no communications to us,” he added.
Republic Act No. 12023, signed by President Marcos last October, requires foreign digital platforms—Americans or otherwise—to pay VAT on services consumed in the Philippines. Digital services include online search engines, marketplaces, cloud services, online media, online advertising and digital goods.
Revenue take
The Department of Finance has projected that the measure would generate about P102 billion from 2025 to 2029—a move that, officials say, would help plug the budget deficit and level the playing field between foreign and local providers.
READ: DOF: VAT on digital services to raise billions for gov’t
The United States, home to tech giants Google, Apple, Meta and Amazon, has long pushed back against digital levies. And Mr. Trump has recently escalated the rhetoric, threatening to raise tariffs on countries that impose such taxes, which he says unfairly target American firms.
There will be pressure on Manila if Trump is serious about his plan. The Philippine government is aiming to raise P4.98 trillion in revenues this year, equal to 16.2 percent of gross domestic product.
It also plans to borrow P2.6 trillion to finance a P1.6-trillion budget deficit, a gap that will push the national government debt to an estimated P17.36 trillion by year’s end.
In a recent note to clients, BMI Research said the Philippines may have to adjust its digital tax policy, warning that higher US tariffs—from the 19-percent currently imposed on Filipino products—would weigh further on the economy and depress revenue collections further.
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READ: Marcos signs law imposing 12% VAT on digital services from offshore firms
