Ecuador to collect taxes from Netflix subscribers

Ecuadorian deputies agreed to apply tax increases of USD 600 million to Netflix and other OTTs. The measure was approved by 83 votes in favor, 8 against and 37 abstentions, and extends the Value Added Tax (VAT) to international digital platforms.

The new law aims to increase revenues with a temporary tax increase for companies whose annual sales is greater than USD 1 million. It also applies additional taxes to mobile phone plans, and removes some tax exemptions for people who earn more than USD 100 thousand per year.

The initiative to increase taxes on foreign OTTs, as a result of an agreement between the Ecuadorian Government and the International Monetary Fund (IMF), ‘represents about one third of the amount that Ecuador needs to raise in 2020 to continue to fulfill the agreed objectives with the entity’, as reported by Colombian newspaper La Republica.