How Digital Service Taxes Could Affect ISPs in the Philippines

Daniel Hollis

Edited by Rabeeca Lee Armstrong

PHOTO BY KABOOMPICS.COM ON PEXELS

As digital service taxes gain ground globally, the Philippines is exploring how to implement its own. While aimed at tech giants, these taxes could ripple across the internet ecosystem.

Local Internet Service Providers (ISPs) may face unexpected costs or compliance challenges. This piece looks into how such tax policies might reshape operations and pricing for ISPs in the country.

What The New Digital Tax Covers

The Philippines now imposes a 12% value-added tax (VAT) on digital services offered by foreign providers. This applies to companies earning from local users, even without a physical office in the country.

The tax affects streaming, cloud storage, e-commerce, and digital tools. A recent tweet confirms this change: starting June 1, 2025, all purchases on the Stream platform—including games, DLC, and workshop content—will be subject to 12% VAT in the Philippines:

🚨 Starting June 1, 2025, all Steam purchases in the Philippines (games, DLC, workshop, etc.) will be subject to 12% VAT due to the government’s taxation of foreign digital services. pic.twitter.com/YCvR7A6jcT
— seika 🐰✨ (@klsochan) March 18, 2025

Other platforms offering similar services are expected to follow.

How ISPs May Respond

ISPs in the Philippines may adapt in several ways as digital service taxes affect the broader online landscape. Some may raise subscription fees to manage rising network demand, especially if users shift toward local content or services due to foreign platform adjustments.

The government’s goal to “promote fair competition” could also influence how ISPs respond. They may lobby for balanced regulations that reflect their role in supporting digital access. For more information, check out the news on the following tweet:

The Philippines will impose a 12% VAT on digital services from tech giants like Amazon, Netflix, and Disney, aiming to level the playing field with local businesses and raise $1.9 billion between 2025 and 2029.

READ: https://t.co/X3ZHopuvk3
— FOCAP (@focapmedia) October 3, 2024

As more platforms face taxes, working together could help manage traffic and maintain user experience.

What It Means For Filipino Consumers

Filipino internet users may soon feel the effects of the new digital service tax. Higher fees are possible as platforms or ISPs pass on added costs, changing how people use online services.

The video below notes that President Marcos Jr. signed the VAT law, expected to raise ₱105 billion in five years: