12% digital VAT raises Philippines Netflix rates

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May 7, 2025 | 12:00am

MANILA, Philippines — Filipinos would have to pay as much as P70 more to watch films, series and shows on streaming giant Netflix, following the application of a 12-percent value-added tax (VAT).

Based on the updated Netflix subscription prices, Filipinos have to pay P70 more for a premium bundle, as it now costs P619 per month, from P549 previously.

Netflix’s premium subscription is its most popular service, allowing four people to watch on the platform at the same time and promising the best sound quality and viewing resolution.

Apart from this, Netflix’s standard subscription increased to P449 per month, from P399 before, while the basic bundle went up to P279, from P249. The cheapest Netflix service also costs P20 more now, at P169, and still limits viewing to one device.

Netflix had to hike subscription rates to comply with Republic Act (RA) 12023, which amended certain provisions of the Tax Code. Specifically, RA 12023 applied the 12 percent VAT on digital services, such as Netflix.

The law applies to online search engines, marketplaces, cloud services, media and advertising, online platforms and digital goods.

However, RA 12023 exempts digital services from the 12 percent VAT if they are categorized as an educational or banking service.

In signing RA 12023 into law last year, President Marcos said the measure would provide at least P105 billion in revenue for the government through 2029.

The President said proceeds from the digital VAT can construct 42,000 classrooms, 6,000 rural health facilities and 7,000 kilometers of farm-to-market roads. The government also plans to allocate five percent of the proceeds for the development of the creative industry.

Marcos believes that digital services have to be taxed, given that providers earn from the growing online usage of Filipinos.

Netflix, for instance, has 2.71 million subscribers in the Philippines as of 2024, based on estimates from FlixPatrol, which collates data on streaming platforms.

Legislators that pushed for RA 12023, such as Albay Rep. Joey Salceda, said the law corrects the previous flaw in the Tax Code allowing foreign companies in the digital space to sell services to Filipinos without the 12 percent VAT.

This, in turn, disadvantages local creatives that have to comply with tax rules in marketing their outputs to Filipinos.