Romania wants to tax digital streaming services and use the revenue to fund the domestic movie industry. The proposed tax would fund the country’s Centrul National al Cinematografiei, which finances film production.
According to reports, a film industry group initially requested a tax of 4%. However, following consultation, the rate will likely be set at 2%.
‘Romania’s consumer won’t pay more’
Romania’s Minister of Culture, Bogdan Gheorghiu, is reportedly confident the tax won’t affect the price of streaming services. Gheorghiu cited comparable regulations in France, which he says haven’t affected consumer prices. In terms of the proposed tax, digital streaming platforms, such as Netflix and Amazon Prime, will pay a percentage of their revenue, based on subscriptions and other charges.
Global consensus on digital services tax
Digital services taxes have caused a lot of controversy recently. Notably, US and lawmakers had trouble reaching consensus on a global digital tax framework. However, the US recently concluded a deal with Austria, France, Italy, Spain and the UK on digital services taxes. The agreement thus helps pave the way for the adoption of the OECD digital services tax framework.
What about VAT on streaming services?
Policymakers are updating their tax codes to meet the demands of the digital economy. Tax on profits is only one option in the policy toolkit.
For instance, Canada recently adopted the so-called ‘Netflix tax’, which applies sales tax to streaming services.
Digital Services VAT is increasingly common globally. Indeed, over 70 countries have already implemented, or are taking steps towards implementing, the OECD’s standards for digital VAT.
The opportunities for generating revenue are significant. According to the OECD, €14.8 billion in digital VAT was collected in the EU in the first four years that the standards were adopted.
A recent IMF report found that Digital Services VAT could generate “an additional $166 million in Bangladesh, $4.8 billion in India, $1.1 billion in Indonesia, $365 million in the Philippines, and $264 million in Vietnam”.
A digital VAT solution for a digital economy
If you provide services online, you likely therefore have VAT obligations in several countries around the world. Managing your global VAT obligations is complex, but Vatglobal’s technology-driven VAT solution makes global compliance simple, efficient and cost-effective.
Get in touch with Vatglobal to stay one step ahead of changing global VAT regulations. We’ll provide the expert advice and information you need to ensure you are always 100% compliant.