The same applies to the imposition of VAT and income tax on “cross-border digital transactions” — The government doesn’t just have a choice to collect these taxes, it has a legal obligation to do so. The only flexibility that can be applied is in finding a cost-effective way to do it without excessively discouraging the business activity providing the revenues. Last week, the US scuttled negotiations on an international tax agreement with France, Spain, Great Britain and Germany, saying the proposed agreement — which French Finance Minister Bruno Le Maire said was “centimeters” from being completed — unfairly targeted US companies. That is a risk the Philippines cannot afford to take and Dominguez certainly realizes that, which is why he specified the pre-condition of an international agreement. Unfortunately, no international agreement will be possible as long as US trade policy is dictated by a narrow, protectionist view, so it is pointless to even broach the subject now.

Source: Manila Times June 22, 2020 16:52 UTC