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Peruvian government does not believe that streaming platforms will raise prices after VAT application
Thursday, August 15, 2024 - 16:30
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According to the Ministry of Economy and Finance, the increase in rates for these services in Latin American countries has been minor and insignificant.

Peru's Ministry of Economy and Finance (MEF) said that the application of VAT to streaming platforms, such as Netflix and Spotify, will not necessarily result in an increase in the prices of services for end users.

He pointed out that the implementation of this VAT collection mechanism will not necessarily increase the prices paid by end users for digital services.

“The implementation of this VAT collection mechanism will not necessarily increase the price paid by end users. The experience of Latin American countries where VAT collection on digital services has been implemented shows that the increase in prices for such services has been minor and insignificant,” he said.

He said that in other service intermediation services such as Airbnb, Uber or Amazon, for example, the effect would be very limited since the VAT that will be collected is not on the total price of the service, but only on the commissions charged by the companies.

“In the case of streaming companies such as Netflix or Spotify, the final price will depend on whether the companies decide to pass on the entire tax to consumers, which would not necessarily happen,” he said.

He indicated that in countries such as Colombia, which levies Value Added Tax (VAT) on these services, no significant effect was observed on Netflix rates, for example, and these are currently even lower than those in Peru, despite the fact that its VAT rate is higher (19%).

"It will depend on the platform's decision, the competition they face, the segment they provide services to, among others," he noted.

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