(QCOSTARICA) Starting October 1, Netflix users in Costa Rica will see the 13% Value Added Tax (VAT) added to their monthly billing, the streaming service confirmed by email on Thursday to all its users in the country.
On July 15, the Ministry of Finance agreed to freeze the VAT for two months.
The 13% Impuesto al Valor Agregado (IVA) – in Spanish – tax will be added to all billings starting on October 1.
Netflix confirmed the change Thursday in a message titled “Tax changes that apply to digital services“.
Dear Enrico,
We hope you are enjoying your Netflix membership. We are writing to let you know about an upcoming change.
A value-added tax (VAT) of 13% is scheduled to apply to your Netflix subscription on October 1, 2020. When this change goes into effect, you’ll see the increase in your next billing period as a separate charge on your credit or debit card.
We’re always adding more great TV shows and movies, so you always have something new to enjoy on Netflix. We love bringing you the very best in entertainment.
You can always cancel your membership at any time at netflix.com/Cancel. Want more information? Visit the Help Center for answers to some common questions. We’re here to help if you need it.
–The Netflix Team
What this means is that subscribers with a Netflix contract for US$15.99 will see an additional monthly charge equivalent to US$2.07 for VAT; contracts for US$12.99 or US$8.99 plan will pay an additional US$1.69 and US$1.17 respectively.
The initial implementation was to have begun on August 1, but due to a request made the 14 banks, public and private, operating in Costa Rica, the Treasury agreed to the postponement.
“The banks asked us for time to make a systems adjustment. They asked us for a longer period, but finally, we reached an agreement (…),” explained Elian Villegas, Minister of Finance.
The application of the VAT to cross-border services was approved in the tax reform of 2019 (Ley de Fortalecimiento de las Finanzas Públicas).
Among the online platforms that will have to apply the 13% tax are: Amazon, Apple, Booking, Dropbox, Encuentra 24, Experdia, Facebook, Glovo, Godaddy, Google, HBO, Hotels.com, Hulu, iTunes, Lifemiles, Linkedin, McAfee, Microsoft, OLX, Skype, Spotify, Tinder, Tripadvisor, Twitter, Uber, Vibe, Wix, and Yahoo. Full details can be found at the Ministerio de Hacienda website.
