Global Technology major Apple has settled a lawsuit with the city of Chicago in the US over so-called ‘Netflix tax’ that places a 9 percent levy on ‘amusements that are delivered electronically’, targeting streaming services.
The ‘Netflix tax’ introduced in 2015, looks to extend the city’s tax on tickets for recreational activities and concerts to digital entertainment platforms. The ‘Netflix tax’ was meant to make up for the lost revenue from traditional brick-and-mortar stores.
The tax is regarded as the first tax specifically targeting OTT platforms including Disney+, Spotify and Amazon Prime Video, reports Hollywood Reporter. “Apple and Chicago have come to terms on a deal to drop the tech giant’s lawsuit challenging the city’s first-of-its-kind tax on users of streaming services,” it added.
Meanwhile, Apple has refrained from sharing the terms of the settlement. As per estimates Chicago collected over $30 million in revenues from the ‘Netflix tax’ in the year ending June 30, 2021. Apple first challenged the tax in 2018.
Meanwhile, other streaming giants that raised legal challenges against the tax include Sony Interactive Entertainment, the Entertainment Software Association (ESA), and an advocacy group representing Netflix, Hulu and Spotify.
An appeals court found no violations of the Internet Tax Freedom Act, rejecting arguments from the advocacy group. Sony has meanwhile, dropped its lawsuit.