Gov’t maintains Digital Tax Policy amid Possible US Retaliation

The Philippine government has made clear it will not backtrack on its newly implemented digital services tax, even in the face of tariff threats from Washington.

Finance Secretary Ralph Recto told reporters on Tuesday that no exemptions have been considered for US technology firms, which are among the largest providers of online services to Filipinos. “We don’t even know how serious they are on any of that. There have been no communications to us, so there’s nothing to communicate,” Recto said.

President Donald Trump previously warned that countries taxing American tech giants such as Netflix, Amazon, and Google would face “substantial additional tariffs” on exports.

The Philippines began enforcing the measure in June, imposing a 12 percent value-added tax on nonresident digital service providers. Officials said the levy is intended to create a level playing field with local businesses already subject to VAT.

Policy experts, however, have warned of potential repercussions. Philippine Institute for Development Studies senior fellow John Paolo Rivera noted that retaliatory tariffs could affect not only trade but also the broader digital economy. “It also sends a chilling signal to other developing countries trying to tax the digital economy fairly,” he said.

Rivera recommended pursuing the issue through multilateral frameworks such as the Organization for Economic Cooperation and Development (OECD) or the World Trade Organization (WTO), rather than leaving it to bilateral disputes.

The move positions the Philippines among a growing number of nations seeking to capture revenue from digital platforms operating across borders—testing the balance between tax sovereignty and international trade relations.