The litigation between Apple and Chicago City over the ‘Netflix tax’ is said to have ended amicably, according to The Hollywood Reporter, who reports that the multinational technology company. That Apple Backs Down On Lawsuit Against Chicago ’s ‘Netflix Tax’.
Lawsuit Against Chicago’s ‘Netflix Tax’
Chicago imposed a 9% tax on “amusements delivered electronically,” essentially targeting streaming services like Netflix, hence the term “Netflix tax.”
Bloomberg Tax had in 2021 reported that over $30 million were made from revenues from the tax. In the year ending June 30th, 2021, the first ever of its kind.
Chicago introduced the new levy in 2015 to compensate for lost revenue in traditional brick-and-mortar stores. But Apple, one of many groups and companies opposing the tax levy, sued the city of Chicago in 2018 over the new law.
Apple was not the only company to object to the new tax law; Sony Interactive Entertainment, the Entertainment Software Association (ESA), and an advocacy group representing Netflix, Hulu, and Spotify also spoke out. That’s why Apple Backs Down On Lawsuit Against Chicago ’s ‘Netflix Tax’.
Apple appears to have softened its stance by offering a settlement, though the exact terms of the settlement agreement have not made public.
Apple faced challenges in the suit, however, because the number of objections to the tax caused the delay. The litigation put on hold for two years while the various streaming service users’ lawsuit worked its way through the courts. The legal stumbling blocks eventually resolved on behalf of Chicago (or not overturned on appeal), settled, or dropped.
Apple’s amended complaint in the suit alleging the unconstitutionality of the suit was last week dismissed by a judge with the Hollywood Reporter reporting that the technology company decided against appealing the verdict.
Taking cognizance of the fact that ‘Netflix tax’ revenues constitute just a tiny fraction of Chicago’s $1.5 billion tax income, the city’s revenue has over the past five years roughly tripled, according to Bloomberg Tax.
It notes that the tax brought in about $9.4 million in its first full year in 2017, while it rose to $28.8 million in 2020, and then $31.2 million 2021 from the 47 businesses registered under the rules.
