Gamers in the Philippines will soon see an increase in their spending on digital games, as Steam and other digital service providers will begin charging a 12% value-added tax (VAT) starting June 1, 2025. This is due to the recent implementation of Republic Act No. 12023, signed into law on October 2, 2024, which expands taxation to include foreign digital service providers.
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Why Is This Happening?
The Philippine government has been working to level the playing field between local and international digital service providers. Previously, foreign companies like Valve (Steam’s parent company) were not required to pay VAT, allowing them to offer competitive pricing compared to locally registered businesses. However, the new law mandates that digital services—such as streaming, cloud computing, and digital marketplaces—must comply with Philippine tax regulations.
This means that international platforms like Netflix, Spotify, YouTube Premium, and now Steam will charge VAT on their services in the country.
What Will Be Affected?
The 12% VAT will apply to all digital purchases on Steam, including:
- Game purchases
- Downloadable content (DLCs)
- In-game transactions (e.g., skins, battle passes)
- Steam subscriptions or services
For instance, if a game currently costs ₱1,000 on Steam, the final price after tax will be ₱1,120. This additional cost may push Filipino gamers to reconsider their spending habits or explore alternative purchasing methods.
When Will This Take Effect?
The law officially took effect in October 2024, but foreign digital service providers have been given a 120-day compliance period from the issuance of the Implementing Rules and Regulations (IRR). Since the IRR was published in early February 2025, the taxation on Steam purchases will officially start on June 1, 2025.
Impact on Filipino Gamers
This tax update has drawn mixed reactions from the gaming community. Some players understand the need for fair taxation, while others express concerns about rising gaming costs. Given that the Philippines already has one of the highest Steam prices in Southeast Asia, adding VAT could make gaming even more expensive for Filipino consumers.
Key takeaways for Filipino gamers:
- Expect a 12% price increase on all Steam purchases.
- Consider buying games before June 1, 2025, to avoid the extra tax.
- Keep an eye out for Steam sales to get discounts that may offset the added VAT.
Final Thoughts
The inclusion of VAT on digital services is part of a broader effort by the government to increase tax revenues and ensure fair competition between local and international digital service providers. While this move may affect consumer spending on digital games, it is a step towards modernizing the country’s tax policies in the digital age.
For more details on this development, check out the original report from Back2Gaming.
What do you think about this new tax on Steam purchases? Will it change the way you buy games? Let us know your thoughts.
