By Aubrey Rose A. Inosante and Justine Irish D. Tabile, Reporters
THE PHILIPPINES may face additional tariffs after US President Donald J. Trump’s fresh tariff threat against countries that impose digital taxes on US technology corporations, analysts said.
In a post on Truth Social, Mr. Trump threatened countries which have digital taxes with “substantial additional tariffs” on their exports to the US in the event that they don’t remove these laws.
“With this truth, I put all countries with digital taxes, laws, rules, or regulations, on notice that unless these discriminatory actions are removed, I, as President of the USA, will impose substantial additional tariffs on that country’s exports to the USA, and institute export restrictions on our highly protected technology and chips,” Mr. Trump said.
The Philippines, which began enforcing its digital tax law in June, could also be among the many countries facing additional US tariffs.
“Prone to have an effect on us since we impose 12% VAT (value-added tax) on digital services,” Ateneo Center for Economic Research and Development Director Ser Percival K. Peña-Reyes said in a Viber message.
Republic Act No. 12023 imposes a 12% VAT on nonresident digital service providers corresponding to Netflix, Amazon, and Google. The law goals to level the playing field between local and foreign digital platforms.
“This might be a part of Trump’s reciprocal tariffs on digital transactions which are taxed by different countries world wide, especially by developed countries,” Rizal Industrial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.
“So, there’s a risk of retaliatory US tariffs within the country (Philippines), though the effect could still be minimal or negligible,” he added.
Mr. Peña-Reyes warned that the US may hike the present 19% tariff on Philippine goods since Mr. Trump stays “unpredictable.”
The US began imposing a 19% tariff on Philippines goods on Aug. 7.
Mr. Ricafort said the US president could still attempt to get concessions by way of reduced digital transaction taxes for US corporations as a part of the trade negotiations.
Mr. Trump in February signed a memorandum to combat the digital service taxes imposed by foreign governments on American corporations.
The directive renewed the digital service tax investigations that were initiated during Mr. Trump’s first term while also investigating additional countries that use digital service tax.
Analysts cautioned the Philippine government against rapidly lifting the VAT on US technology firms.
“(That is) something the federal government should study and weigh fastidiously — revenues lost from lifting tax versus revenues from lower exports attributable to higher tariff,” Mr. Peña-Reyes said.
The Department of Finance has estimated that the federal government will generate P102.12 billion in revenue from digital VAT collections between 2025 and 2028.
“It’s hard to be optimistic that the trade advantages we may get from lifting taxes will probably be greater than the impact of additional revenues we may get from taxes which, if used appropriately, may assist in developing industries through government support and extra incentives,” Matt Reinielle M. Erece, an economist at Oikonomia Advisory and Research, Inc., said.
Asian Consulting Group Founding Chairman and Chief Tax Advisor Raymond A. Abrea said that the Philippine law will not be solely targeted at US tech giants, “but reflects a broader global move to modernize tax systems within the digital age.”
“The Philippines didn’t create a separate digital tax. We simply expanded VAT to incorporate online transactions and digital service providers, ensuring fairness between traditional and digital businesses,” Mr. Abrea said in a Viber message.
Mr. Trump had claimed these digital taxes were “designed to harm, or discriminate against American technology,” while giving a pass for Chinese firms.
Meanwhile, Mr. Erece said the specter of additional tariffs poses risks to the country’s export sector and broader economic performance.
“Due to this fact, the country must do two things: proceed close but persistent trade negotiations with the US but additionally be aggressive in supporting and incentivizing exporting industries to develop competitive goods that remain attractive to foreign consumers despite tariffs being in place,” he said.
Philippine Chamber of Commerce and Industry Chairman George T. Barcelon said that companies are in a wait-and-see stance until the brand new tariffs are clarified.
“We’re taxing services that come from the US, like loads of software platforms. Even when it’s on the cloud, on a prescription basis, now, there’s already a VAT,” Mr. Barcelon said in a phone interview.
“I have no idea whether that translates to the undeniable fact that President Trump will impose their version of a tax on our exports. However it feels like that will probably be the effect,” he added.
Meanwhile, the 19% US tariff is anticipated to have a smaller impact on the Philippine economy than previously expected, Fitch Solutions’ unit BMI said.
“We estimate that the revised tariff rate will result in a 0.4-percentage-point (ppt) reduction in output over the medium term, a major improvement from the 1.4-ppt decline we estimated in April,” BMI said in a report.
BMI said it maintained its full-year gross domestic product (GDP) growth forecast for the Philippines at 5.4% because it expects global economic conditions to deteriorate within the second half when US tariffs take effect.
BMI’s forecast is below the federal government’s 5.5-6.5% GDP growth goal for the yr.
“The Philippines stays a largely domestically driven economy. While rates of interest have eased considerably from their peak, erratic US trade policies will weigh on global investor sentiment and limit foreign direct investment inflows,” BMI said.
“As such, we see little prospect for a meaningful investment recovery within the near term. Household consumption is showing similar weakness. Import volumes — a reliable proxy for personal spending — proceed to contract sharply and up to date consumer surveys suggest confidence has eroded further as trade tensions escalate,” it added. — with K.K.Chan