Emerging Legal Issues for Software and Game Development in the Philippines

There are key areas which companies in the game and software development space, of which, should be aware of in order for them to easily conduct business. This is a quick list of emerging trends which needs to be taken into consideration.

Security of Intellectual Property

Intellectual property as a core component of business strategy has been a feature of the legal landscape for a very long time. However, the sophistication which these issues should be approached has lagged behind in much of the business land scape. These are just a few things you should be asking yourself to check if are ready for the legal burdens that your business might entail:

  1. Have you registered your Intellectual Property with the Intellectual Property Office? (Trademark, Copyright, Patent)
  2. Is intellectual property that you own or are using subject of a thoroughly reviewed licensing agreement?
  3. If you received a sternly worded Cease and Desist Letter tomorrow concerning your use of your intellectual property, do you have a system in place to respond to it?
Photo by Héctor J. Rivas on Unsplash

If the answer to the above questions is somewhat unclear to you then it’s appropriate that you begin the process of discerning how you can remedy these lapses. A useful resource in this regard is the Intellectual Property Office of the Philippines. Many of the services (such as Trademark application and the like) can be accomplished entirely online.

Value Added Tax and registration of E-Invoicing Systems

The passage of the TRAIN and CREATE Laws brought some much needed reform to the very outdated tax laws in the Philippines. A catena of regulations have been issued by the Bureau of Internal Revenue for the purpose of implementing the above laws. However, not all of them have been positive for business. Specific to the Software and Game Development sector which primarily exports services abroad an the exemption on Value Added Tax for Local Purchases was removed and all exporters of services are required to register with the BIR’s E-Invoicing System (EIS).

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Essentially, if you are incurring a substantial amount of Creditable Input VAT in your operations whether by way of: Rental, Receipts on the Services of Contractors Licensing Agreements, or other substantial business expenses. For the non-accountants, functionally a 12% premium is being imposed on every transaction which relates to your export sales. This is unless you avail of the BIR’s process of VAT Refund Applications to be undertaken with the Bureau of Internal Revenue’s VAT Credit Audit Division. This process is slated to go digital eventually via the full implementation of the BIR’s EIS. It is imperative that a review of the books of a corporation engaged in export sales be undertaken to retool business process to make space for the above regualtions.

Data Privacy

Data Privacy is a nebulous concept for many people. However, the formulation is quite simple. If you are processing “Sensitive Personal Information” which is any piece or combination of information which could identify a person. For example, names and contact numbers are sensitive personal information. However, other data points such as age, location, civil status, occupation can when taken together function as to identify a person.

Photo by Jason Dent on Unsplash

There are regulations imposed by specific jurisdictions like the European Union with its General Data Protection Regulation which have garnered attention for the higher standard they impose. A businessman in the field of software or game development can be forgiven for not knowing where to begin in the face of the alphabet soup of regulations. However, a good place to begin is by getting registered with the National Privacy Commission. Many of the structures required by the Philippine Law (such as the appointment of a Data Protection Officer) are mirrored across jurisdictions.

Atty. Hourani practices law in Cebu City, PhilippinesIf you would like to set an appointment with him, you may reach him here.

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