Steam to implement 12% VAT in PH starting June 1

Steam will impose a 12% value-added tax (VAT) in the Philippines starting June 1.

This tax will be automatically reflected in the final price before purchase, meaning an additional P120 for a P1,000 video game.

In-game purchases and downloadable content (DLCs) will also be subject to the 12% VAT.

The move follows the passage of Republic Act 12023, the VAT on Digital Services Law, which taxes digital transactions for both local and foreign digital service providers.

President Ferdinand "Bongbong" Marcos Jr. signed the measure into law on October 2, 2024, amending the National Internal Revenue Code of 1997.

The law covers digital services such as media, music, video games, video-on-demand, and online advertisements, affecting platforms like Netflix, Spotify, Amazon, Disney+, and Lazada.

Compared to other countries, the Philippines' 12% VAT on Steam games is higher than rates in the UAE and Taiwan (5%), Thailand (7%), Malaysia (8%), and Singapore (9%), making it one of the highest in Southeast Asia.