As Netflix flourished during the coronavirus lockdowns, the company is passing on new digital tax fees to Mexican users eager to avoid infection.
The streaming service will charge the government 16% value-added tax (VAT) for standard and advanced users from June. The company said it would absorb half of the tax for its basic plan subscribers.
The digital platform that once flew under the supervision of the Mexican tax authorities has now become the country ’s latest tool for increasing revenue, because the economy is expected to contract by 7.5% and oil exports will fall sharply. When the collection plan was announced, experts wanted to know that the 16% tax rate was too high for the company to pass on to consumers, but at least in Mexico, the company may bet that viewers staying indoors will not cancel the subscription.
The company said in a statement: “The Mexican government will add value-added tax to digital services like Netflix from June 1. We have started to inform our members that we will adjust prices accordingly, while also working hard to The impact of the plan is minimized. ”
The streaming service added 15.8 million customers worldwide in the first quarter of this year, setting a record. Although the S & P 500 index fell 11% this year, Netflix rose 35%.
In its 2020 budget proposal, the Mexican government aims to allow companies such as Netflix and Airbnb Inc to collect VAT from users and remit it to the tax authorities.
The government has stated that this tax is not new. It is a tax that companies providing services should have already levied. Mexico ’s tax level is the lowest among OECD member countries. -Bloomberg