Income Tax department of India plans to tax Netflix India’s income
- ByStartupStory | May 13, 2023
India is reportedly planning to tax the income of Netflix Inc’s streaming services in the country, as per a report by the Economic Times. This move is expected to be the first to tax overseas digital companies providing services to Indian consumers. The income tax authorities in India have reportedly observed that since Netflix has a permanent establishment in India, it becomes liable to get its India income assessed for tax. The authorities have attributed about Rs 55 crore income to Netflix’s Indian permanent establishment in the assessment year 2021-22.
Furthermore, the officials have reasoned that Netflix had some infrastructure and employees from the parent entity on secondment in India to support its streaming services, leading to a permanent establishment and tax liability in the country. The move comes as Netflix rolled out its streaming services in India in 2016 and became a massive hit. As of now, the company reportedly has over 6 million subscribers in India.
Netflix has faced declining numbers across several countries, leading the company to take steps like no password sharing and others to ensure its subscriber count and revenue don’t dip. This new tax may affect Netflix’s revenue and subscriber growth in India. The streaming giant has yet to release a statement on the matter. The move to tax overseas digital companies providing services to Indian consumers could set a precedent for other countries to follow suit.
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