netflix-silverlight-html5Given that online services and products like video streaming, apps, digital downloads, and more aren’t tangible goods, is it possible to tax them? Well governments around the world are trying to figure this one out, but as far as Chicago is concerned, their online tax has already come into effect, which has been nicknamed “cloud tax”.

Basically this applies to services that are “delivered electronically”, which in turn includes the likes of Netflix which will be seeing a price hike thanks to the tax. The tax is valued at 9% meaning that if you’re a Netflix subscriber, your subscription just got more expensive. In a statement Netflix made to ArsTechnica, “We will be adding it to the cost we charge subscribers. Jurisdictions around the world, including the US, are trying to figure out ways to tax online services. This is one approach.”

Like we said this will apply to services that are delivered electronically so Netflix won’t be the only one affected by this. It will also be affecting other video content providers as well as music streaming providers, so expect your subscriptions to the likes of Apple Music, Spotify, and Tidal to increase in price as well.

As expected some aren’t too pleased with the idea of the tax being implemented. One of them being Michael Wynne, the lead author of the Reed Smith article who claims that the new ruling has left it open for possible litigation. “Nonetheless, there are strong arguments that both rulings run afoul of provisions in the Federal Telecommunications Act, the Internet Tax Freedom Act, and federal and Illinois constitutional limits on taxation.”

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