The Jerusalem Post ePaper

‘Netflix tax’ could raise price of streaming subscription

• By ZACHY HENNESSEY

As part of its upcoming state budget, the Finance Ministry

has proposed a bill that would require Israel’s 17% value-added tax (VAT) from foreign digital service providers such as streaming platforms Netflix, Spotify, Apple Music and Disney+, as well as tools such as the Adobe software suite, VPNs and cloud-storage platforms.

Though the providers would be obligated to pay the added VAT, it’s likely the move would result in higher subscription fees to consumers, as the companies would have little reason not to pass the fee on to those purchasing their services instead of swallowing the cost.

The so-called “Netflix tax,” claimed the Finance Ministry, is intended “to prevent discrimination between Israeli businesses and foreign businesses.”

“It is proposed, in accordance with the OECD recommendations, to apply a VAT payment obligation to companies whose domicile is not in Israel for the sale of digital services to Israeli consumers,” the ministry stated. “Digital services include online buying of products such as streaming services... music players and games. Most of the companies that provide these services are international companies.”

According to the ministry’s estimates, the additional tax would generate around NIS 500 million per year for the government.

Israel Internet Association CEO Yoram HaCohen expressed his support for the bill.

“This is a welcome step that will prevent discrimination of local businesses in Israel against global companies,” he said. “The current situation allows the technology giants, for example, to sell services to Israelis in Israel without paying tax, unlike a local Israeli business that is required to collect VAT. This is an unfair advantage.”

HaCohen brushed away concerns that the bill would result in higher costs for end users, suggesting, “International corporations are expected to absorb this increase and not impose it on consumers.”

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2023-02-03T08:00:00.0000000Z

2023-02-03T08:00:00.0000000Z

https://jpost.pressreader.com/article/281582359776997

Jerusalem Post