It is high time for countries like the Philippines to collect value-added tax (VAT) from the digital economy to offset substantial foregone revenues felt across the region, according to a World Bank report.
The World Bank Group’s flagship World Development Report 2021 titled “Data for Better Lives” showed that in the Philippines, Indonesia, Malaysia, Singapore, Thailand and Vietnam, a combined $5 billion in potential tax revenues were lost due to their failure to apply current VAT rules on digital services.
If unaddressed, revenue losses across these six Association of Southeast Asian Nation countries would rise to more than $6 billion this year and nearly $8 billion next year, World Bank estimates showed.
The uncollected taxes could further balloon to more than $9 billion in 2023, $11 billion in 2024 and almost $14 billion in 2025.
The World Bank said these estimates reflected the indirect VAT potential of business-to-consumer e-commerce in the six countries.
“Evidence from East Asia indicates that the rapid growth of business-to-consumer e-commerce has resulted in equally significant growth in the tax potential of the sector, with the indirect tax potential growing some eightfold, rising from $460 million in 2015 to $3.7 billion in 2019,” the World Bank said.
READ full story HERE.