Apple to Collect ‘Netflix Tax’ Starting This September! Here’s Why

Apple agrees to collect the "Netflix Tax" in Chicago starting this September.

It follows the decision of the Cupertino-based tech giant to give up its four-year legal battle. The renowned tech giant argues that the 2015 Amusement Tax goes against the United States Constitution and the federal Internet Tax Freedom Act.

And as such, it would start collecting a percentage of its subscription earnings from its streaming service in compliance with the "Netflix Tax" mandate in Chicago.

Apple to Collect 'Netflix Tax' This September

The Netflix Tax goes as high as 9% of the total revenue of its video streaming service, Apple TV Plus, from its customers in Chicago, as per the latest news story by Apple Insider.

The news outlet further reports that the iPhone maker has already agreed to start collecting "Netflix Tax" beginning next month.

To be more precise, Apple would start collecting at least 9% of the subscription fee of Apple TV Plus users based in Chicago on Sept. 15.

(Photo : PATRICK T. FALLON/AFP via Getty Images)
The Apple TV+ logo is seen on the backdrop for the red carpet arrivals of "The Last Days of Ptolemy Grey" premiere at the Bruin Theatre in Westwood, California, March 7, 2022.

'Netflix Tax' in Chicago

According to a recent report by The Verge, Chicago debuted the new tax measure that goes by the name "Netflix Tax" several years ago or in 2015, to be more exact.

The tech news website says Chicago introduced the new tax as the city seeks to find new sources of revenue after its earnings from the traditional retail stores have slumped.

The Verge highlights that the revenues from the so-called "Netflix Tax" has ballooned over the years since its collection began.

Last year or in 2021 alone, the city of Chicago has already pocketed a staggering $31.2 million, which includes more than 40 businesses.

The earnings from last year are a slight bump from its numbers in the past two years. In 2020, the new tax measure raised a cool $28.8 million.

Apple vs. 'Netflix Tax'

But in 2018, the Cupertino giant brought the new tax to court, arguing that it is unconstitutional.

It is worth noting that other tech giants have actually challenged the "Netflix Tax" measure in Chicago. It includes the Japanese firm Sony Interactive Entertainment and an advocacy group representing giant streaming services like Spotify, Hulu, and Netflix.

In late July, Apple reportedly settled its lawsuit against the city's "Netflix Tax." At first, the terms in the settlement were hidden from the public.

However, the latest news claims that the settlement pushes Apple to start collecting taxes on its Apple TV Plus subscribers.

This article is owned by Tech Times

Written by Teejay Boris