"The amusement tax applies to charges paid for the privilege to witness, view or participate in an amusement," states the city's new ruling (pdf).
"This includes not only charges paid for the privilege to witness, view or participate in amusements in person but also charges paid for the privilege to witness, view or participate in amusements that are delivered electronically."
Sources:
- http://www.dslreports.com/shownews/C...lix-Tax-134367
- http://www.chicagotribune.com/news/l...701-story.html
- http://www.theverge.com/2015/7/1/887...etflix-spotify
Netflix service in Chicago is about to get notably more expensive [ed. 9%+ tax]. On the hunt for new revenue, Chicago's Department of Finance is applying two new rules that would impact companies like Netflix and Spotify. One covers "electronically delivered amusements" and another covers "nonpossessory computer leases"; together they form a unique and troubling new attempt by cities to tax any city resident that interacts with "the cloud. According to the Chicago Tribune, streaming service providers need to start collecting the tax starting September 1.
The new tax is expected to net the city of Chicago an additional $12 million annually.The expansion of the amusement tax does not apply under this new interpretation to music, movies or games that are bought electronically, such as individual albums, songs or movies bought on iTunes.
A Netflix spokeswoman confirmed that the company will pass the additional cost onto subscribers but said no other details were available.
...
He expressed concern that the tax expansion, applied in a city already known for high taxes and fees, could be enough to push residents and companies to find ways to dodge them. Since the taxes will be levied based on Chicago billing addresses, Wynne said there's nothing to stop people and businesses from moving outside the city limits or listing billing addresses in other towns.
"Let's say I sign up for streaming business data in the city but I have offices throughout the country," Wynne said. "I will definitely make sure my billing goes through a different office."Share on Facebook Tweet Share Pin
The past five years have seen a huge shift in the way we consume media, as brick-and-mortar stores shift to digital subscriptions. It's been a valuable tradeoff for some, building billion-dollar companies and unlocking huge libraries of music and video for relatively paltry subscription fees, but it's also been a challenge for cities that rely on those businesses for revenue. Now, Chicago wants to take back those missing taxes, and the way it's retaking them has some lawyers up in arms.
Today, a new "cloud tax" takes effect in the city of Chicago, targeting online databases and streaming entertainment services. It's a puzzling tax, cutting against many of the basic assumptions of the web, but the broader implications could be even more unsettling. Cloud services are built to be universal: Netflix works the same anywhere in the US, and except for rights constraints, you could extend that to the entire world. But many taxes are local — and as streaming services swallow up more and more of the world's entertainment, that could be a serious problem.
Chicago's new tax is actually composed of two recent rulings made by the city's Department of Finance: one covering "electronically delivered amusements" and another covering "nonpossessory computer leases." Each one takes an existing tax law and extends it to levy an extra 9 percent tax on certain types of online services. The first ruling presumably covers streaming media services like Netflix and Spotify, while the second would cover remote database or computing platforms like Amazon Web Services or Lexis Nexis. Under the new law, what passes as $100 of server time in Springfield would cost $109 if you're conducting it from an office in Chicago.