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How would a tax on Netflix and other platforms work?

August 15, 2017 by Staff News Writer

Digital television services will have to pay taxes if a new bill is approved. It is part of the Project for Strengthening Public Finances presented by the Government.

Given the possibility that companies such as Netflix should pay more (and this is transferred to the user), many complained. But the movement is part of a trend, which has left changes and new taxes in other countries, including Latin America.

Deputy Finance Minister Fernando Rodríguez said that the service would be subject to a tax in general, but broader definitions would be made.

According to Rodríguez, the project will have broader categories and will tax everything, saved exceptions marked by law. The objective of the Government, with the change in Value Added Tax (VAT) is to generalize the tax because the broader the base, the more difficult it is to evade and the more it is collected.

Deputy Minister Rodríguez mentioned that the key is whether a service generates a charge or not and how that charge is generated (the email service or WhatsApp is not included, for example). The way in which the tax will be collected would be by retention with the card or the mechanism of payment of the local financial system.

Article 30 of the Project will try to define it, because today the legislation only allows withholding local purchases. Tax lawyer Cristina Sansonetti criticized that the entities that issue cards – credit or debit cards – are responsible for collecting the tax.

The expert of the firm Consortium Legal believes that the wording is unclear and opens a risk of a double payment.

The specialist believes the proposal does not fit the national reality, nor the nature of the consumers of these services. She believes that if the Government wants to tax services such as Netflix, it should consider establishing processes for these companies to have a taxpayer number or some obligation in Costa Rican soil.

This is far from the threat by the Executive Power, that interest rates would rise if this tax is not applied.

Netflix and other companies that offer products and services through web platforms have already been taxed in other countries of the continent. The Chicago government was a leader in doing so in the United States over two years ago. Argentina has already passed regulations.

And in Uruguay there is a debate about how to control the “dematerialized” economy. One of the political parties presented a project with taxes for platforms offering series and other audiovisual products. The proceeds would go to early childhood centers.

crhoy.com

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