Mar 01, 2021 to Jun 30, 2022
Funding Agency:
Philippine Institute for Development Studies
Focus Area(s):
Science, Technology, and Innovation

Although taxation of the digital economy has been in the government’s agenda even before the pandemic, the cost of the pandemic response, as well as the need to finance recovery programs will drive an even greater need for revenue generation. The taxation of digital transactions offers a visible, and readily available source of revenue. Beyond the need for immediate revenues, it is also an issue of development and equity. Users in the Philippines are often among the most engaged, either as users or creators in driving the value and network effects for stakeholders of these platforms, driving the value and network effects for stakeholders of these platforms, who are usually based in developed economies. Recent developments have also caused concern over the growing power of the tech sector and the negative externalities arising from their growth - such as the erosion of user privacy, the distortion of the information environment, and the polarization of public discourse. National tax systems are straining to capture revenue from businesses in the digital economy. This is due to the fact that these businesses are characterized by complexity of transactions, absence of physical presence, strong dependence on intangible assets. This study aims to tackle the digital taxation problem by providing a comprehensive review of the literature regarding the taxation of the digital economy, as well as proposed solutions; providing a gap analysis of the Philippines’ current tax regime for digital transactions; and providing recommendations for reform based on gap analysis and stakeholder feedback.

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