Tax on Streaming Services in Peru: How Is It Affecting Users?
Peru has introduced a tax on streaming services, which not only applies to these platforms but also extends to around 600 other services, including Uber, Zoom, and Spotify. The so-called “Netflix Tax” has raised concerns among users, as subscription costs will rise from 1st December.
Following the publication of Legislative Decree No. 1623 in August 2024, the General Sales Tax (IGV) and Selective Consumption Tax laws were amended to include digital services and the import of intangible goods via the internet. According to the Ministry of Economy and Finance (MEF), the new measure is expected to generate between USD 160 million and USD 213 million in revenue.
How Does This Tax Affect Streaming Services?
Taxes on streaming services are not new, having already been implemented in countries like the United States, Mexico, Chile, and Argentina. Like any other product or service, a percentage is added to the total cost, though the amount varies depending on the country. The goal remains the same: to raise tax revenue.
In Peru’s case, the General Sales Tax (IGV) will be applied to streaming services at a rate of 18%. This will be collected by the National Superintendence of Customs and Tax Administration (SUNAT), and companies must register with the Single Taxpayer Registry (RUC).
The tax, initially set to be implemented on 1st October but postponed, has caused streaming services to increase their prices. For instance, from 1st December, Netflix’s Basic plan will rise from USD 6.24 to USD 7.70 per month. The Standard plan will go up from USD 9.30 to USD 10.90, and the Premium plan will increase from USD 10.90 to USD 14.10.
Similarly, from 2nd December, Max will raise its prices. The Basic plan will go from USD 5.30 to USD 6.37 per month, the Standard plan from USD 7.97 to USD 9.57, and the Platinum plan from USD 10.64 to USD 12.70. It’s important to note that Max will continue to offer a 50% discount for users who purchased their plans under this promotion.
Prime Video raised its rates on 4th November, increasing from USD 5.30 to USD 6.37 per month. Disney+ is the only streaming service yet to announce a price increase, although it has stated that changes may occur in the future.
It’s worth mentioning that the new rates don’t exactly reflect the full 18% tax, as Netflix’s price increase is around 15%, while Max and Prime Video have raised their prices by about 16.7%. In other words, companies are absorbing part of the increase for now.
How Does the Tax Affect Users?
Since the announcement of the tax on non-resident digital platforms, the imminent price hikes have sparked considerable debate. However, the concern isn’t solely due to the tax; subscription prices have been rising over the past two years.
According to the 2024 Latin American Streaming Consumption Report by Sherlock Communications, Peruvian users are unhappy with these increases. The study found that 23% of streaming service subscribers have cancelled at least one platform since the price hikes began.
It’s important to understand the type of tax that is being implemented. The General Sales Tax is aimed at taxing the final consumer, meaning the IGV is charged to the user who subscribes to the service. This should not be confused with Income Tax (IR), which taxes companies on their profits—this tax is not being implemented in this case.
The collection of IGV is similar to any other product or service, though Peruvians typically don’t notice it, as the tax is already included in the price they pay for most goods and services. From 1st December, the same will apply: the new rates for streaming services will include the IGV in the final price.
What’s Expected in 2025?
The tax is being implemented due to the presence of around 600 non-resident companies offering digital services in Peru. As of the end of November, only 32 have started the registration process with the RUC, according to Víctor Mejía, head of SUNAT.
Netflix, Disney+, Max, and Prime Video—the most popular streaming services in Peru—are on this list. Mejía also noted that an additional 20 platforms are in the process of registering, due to technological or administrative adjustments.
By the first weeks of January 2025, SUNAT expects to have a clearer picture of the tax collected during the first month of implementation. If any companies fail to comply with the new regulations, payment facilitators (such as banks or operators) will be tasked with withholding the tax on behalf of the companies.
While many Peruvians are frustrated by the price increases, it’s important to remember that taxes are a common part of doing business. Looking at other countries as a reference, no streaming service has ceased operations due to these charges, and tax authorities continue to improve enforcement mechanisms.
