Netflix India: Government is planning to tax Netflix India’s income generated from streaming services in the country. According to a report, the tax authorities have reportedly attributed an income of approximately Rs 55.25 crore ($6.73 million) to Netflix’s permanent establishment in India in the assessment year 2021-22, citing a draft order.
Sources said that this is the first time when India will tax a foreign digital company that provides electronic commerce services to customers. The reason behind the move is that Netflix has employed some of its employees and infrastructure from the parent entity in India to provide support for its streaming services. This has led to the establishment of a permanent presence in India, which in turn creates a liability for taxes.
Move to regulate digital economy
The move is part of India’s efforts to regulate the digital economy and ensure that foreign companies pay taxes on the revenue they earn in the country. The Indian government has been mulling to introduce a digital tax for some time now. Action against Netflix could be seen as a test case for future taxation of other foreign digital companies, according to the report.
Netflix has not yet made any public statement regarding the matter.
Netflix launched its streaming service in India in 2016. Today it has more than 6 million subscribers. According to reports, Netflix Entertainment Services India ended FY21 with a gross revenue of Rs 1,529.36 crore.
Earlier, Netflix India’s vice president (content) Monika Shergill had said that the company’s total viewing hours increased 30% from a year earlier, while revenue increased 25%.
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