Chilean Government aims to increase taxes to OTTs and equaling them with VAT

Chilean Finance Minister, Felipe Larraín, proposed to apply an up to 19%  increasement to OTTs taxes, in the context of the tax modernization project promoted by the Government. The initiative contemplated a 10% raise at first, but the Government suggests equaling the figure with VAT’s value.

‘Netflix competes with DirecTV, VTR, with all the other suppliers that do pay VAT, but they also pay an income tax because they are established in Chile’, Larraín explained, and stated that Netflix ‘pays nothing’.

However, tax lawyer Hernán Fuentes acknowledged to be ‘quite difficult not to think that this cost or this tax is not going to be recharged to final consumer’, and expressed that ‘there have not even been companies providing these services signs that they are going to take a part or the total over. In general, all these surcharges generated, in most cases, are paid by the final consumer’.

The measure is part of a list of points that will be debated by Chilean parliamentarians. They are expected to make a final decision  in the first week of April, when the Tax Reform legislation will be voted on.