Video Game Tax?
The digital gaming landscape is about to undergo a significant change in the Philippines. Starting June 1, 2025, all purchases made on Steam, including games and workshop items, will be subject to a 12% value-added tax (VAT) as part of the government’s broader effort to tax foreign digital services. This move aligns with the Philippine digital services tax law, which aims to ensure that international platforms comply with the same tax obligations as local businesses.
This article will delve into how this new tax policy affects the price of video games on Steam and potentially other platforms, including console gaming. Additionally, it will explore the concept of “owning” digital games, particularly on platforms like Steam, where users technically do not own the games they purchase.
Related: https://www.gadgetpilipinas.net/2023/05/bir-withholding-tax-online-sellers/
Impact on Game Prices
The introduction of a 12% VAT on Steam purchases in the Philippines means that game prices will increase slightly. For instance, a game priced at ₱1,000 will effectively include ₱107 in VAT, making the total cost ₱1,107. This change is inclusive, meaning that the VAT will be reflected in the displayed prices rather than being added at checkout.
While this increase might seem minor, it could have a cumulative effect on gamers who frequently purchase games or in-game items. For collectors like myself, who own over 1,311 games on Steam, this change could lead to a noticeable increase in expenses over time.
Impact on Other Platforms
The taxation of digital services is not unique to Steam or the Philippines. Other platforms, including console gaming services like PlayStation and Xbox, might also face similar tax regulations in the future. This trend is part of a broader global effort to ensure that digital transactions are taxed similarly to physical ones.
In the United States, for example, Steam has begun introducing local sales taxes on market transactions in select states where such taxes are mandated. This move reflects a growing trend where governments seek to capture revenue from digital transactions that were previously exempt or lightly taxed.
The Concept of “Owning” Digital Games
When you buy a game on Steam, you don’t technically own it. Instead, you purchase a license to use the game, which is subject to Steam’s terms of service. This distinction is crucial because it means that your access to the game can be revoked under certain circumstances.
Steam’s terms explicitly state that users do not own the games they purchase but rather acquire a license to use them. This license can be revoked if Steam decides to remove the game from its platform or if the game’s developer withdraws it. Additionally, if Steam were to shut down, there is no guarantee that users would retain access to their purchased games.
Revocability of Game Licenses
The revocability of game licenses is a significant concern for gamers. While Steam has not historically removed purchased games from users’ libraries, there have been instances where games have been delisted due to licensing issues or legal disputes. In such cases, users may still retain access to the game if they have already downloaded it, but they cannot purchase or download it again if it is removed from the store.
Comparison with Physical Ownership
Physical game ownership, such as buying a game on a disc, offers more control and permanence. Once you purchase a physical copy of a game, you own it outright and can use it as long as the hardware supports it. In contrast, digital games are tied to the platform’s terms and conditions, which can change over time. (This is the reason why a lot of consumers prefer having digital licenses to play the game cheaper than buying physical counterparts.)
Workarounds and Alternatives
Some platforms, like GOG (formerly Good Old Games), offer a different approach by providing offline installers and keys for purchased games. This model gives users more control over their digital libraries and ensures that they can install games even if the platform is no longer available.
Critique and Future Implications
The taxation of digital games, while understandable from a revenue perspective, raises questions about the value proposition for consumers. When you’re taxed for buying something you don’t truly own, it challenges the traditional understanding of consumer rights and ownership.
For gamers, this situation highlights the importance of understanding the terms of service when purchasing digital content. It also underscores the need for platforms to provide clearer guarantees about long-term access to purchased games.
In the future, as more countries implement digital services taxes, gamers can expect to see similar price increases across various platforms. This trend may lead to a reevaluation of how digital goods are sold and consumed, potentially pushing platforms to offer more robust ownership models or alternatives that better align with consumer expectations.
So, what now?
The introduction of a 12% VAT on Steam purchases in the Philippines marks a significant shift in how digital games are taxed. While this change is part of a broader effort to regulate digital transactions, it also highlights the complex issue of digital ownership. As gamers, we must be aware of the terms under which we purchase digital content and advocate for models that provide greater control and permanence over our digital libraries.
In the end, being taxed for buying video games that you don’t actually own raises important questions about consumer rights and the future of digital gaming. As the industry evolves, it will be crucial to balance the need for taxation with the need for consumer protections and clearer ownership models.
Giancarlo Viterbo is a Filipino Technology Journalist, blogger and Editor of gadgetpilipinas.net, He is also a Geek, Dad and a Husband. He knows a lot about washing the dishes, doing some errands and following instructions from his boss on his day job. Follow him on twitter: @gianviterbo and @gadgetpilipinas.
