The Impact of the 12% VAT on Steam Games in the Philippines: What It Means for Sellers and Gamers
Starting June 1, 2025, all Steam purchases in the Philippines will be subject to a 12% value-added tax (VAT) as part of the government’s taxation on foreign digital services. While this primarily affects Filipino gamers, it also has significant implications for game developers, publishers, and sellers who distribute their games through Steam. Let’s explore how this new tax policy might impact them.
| To be collected in the future | ||||
| Country (?) | Country Name | Tax Rate | Tax Type | Effective Date |
| PH | Philippines | 12% | Inclusive | June 1, 2025 |
How the VAT Tax Works on Steam
Steam, like many other digital marketplaces, is required to comply with local tax laws in different countries. With the Philippine government implementing VAT on foreign digital services, Steam will now automatically include the 12% tax in game prices. This means that:
- The displayed prices on Steam will already include VAT rather than adding it at checkout.
- Steam itself will handle the tax collection and remittance to the Philippine government, removing the administrative burden from developers.
Impact on Game Developers and Publishers
Will Game Sellers Lose Revenue?
No, developers and publishers will not directly pay the 12% VAT from their revenue. However, the tax affects pricing strategies and potential earnings in several ways:
- If developers keep prices unchanged, the total cost for Filipino gamers will increase, which may lead to lower sales volume.
- If developers lower base prices to offset the VAT, they absorb part of the tax burden by reducing their revenue per sale.
- Price-sensitive markets, like the Philippines, might see players spending less or waiting for discounts.
The Potential for Price Adjustments
Steam allows developers to set different regional prices, but if they don’t adjust for the tax, Filipino gamers might experience a noticeable price increase. Some possible outcomes include:
- AAA publishers may keep prices the same, passing the full VAT burden to consumers.
- Indie developers may adjust pricing slightly to remain competitive in the Philippine market.
- Subscription services (e.g., Steam’s own plans) could see reduced sign-ups due to increased costs.
How Gamers Might React
With this tax in place, Filipino gamers may seek alternatives, such as Regional pricing tricks, some players might use VPNs to purchase games from cheaper regions. Third-party key sellers websites like Humble Bundle, Green Man Gaming, or GOG could become more appealing if their prices remain unaffected. Waiting for bigger sales like seasonal discounts on Steam might see increased popularity as gamers wait to offset the VAT impact.
What This Means for the Philippine Gaming Market
While the VAT tax aligns the Philippines with global digital taxation trends, it does pose challenges:
- Developers may need to reassess pricing strategies for the region.
- Players may spend less or switch to alternative platforms.
- The government stands to increase tax revenue from digital purchases, potentially leading to further regulations in the gaming industry.
The introduction of a 12% VAT on Steam purchases in the Philippines is a significant change that affects both gamers and developers. While sellers won’t be directly taxed, the increase in game prices could impact sales, leading to potential shifts in consumer behavior. Whether this tax will encourage game developers to rethink pricing or simply push players towards other methods of purchasing games remains to be seen. Filipino gamers and developers alike will need to adapt to these changes as they take effect in mid-2025.
To find out more information on the price increase and the law passed, visit: Steamworks, GVC
