In June, Chile will start to impose a Digital Services Tax on American tech companies such as Google, Amazon, Netflix, and Uber. The Chilean government introduced a 19% value-added tax on digital and online services provided by foreign companies. Chileans have been benefiting from the expansion of the digital economy for many years. Especially in recent months in response to the COVID-19 pandemic.
Chile’s Finance Minister Ignacio Briones Rojas wants to grab more than 40 million dollars from digital companies annually, but will actually significantly hurt Chilean consumers.
Chileans will have to start paying almost a fifth more for digital services such as the video streaming service Netflix in June when the government’s 19% value-added tax begins to be applied. Many other digital companies are expected to adjust pricing as well.
With this new digital tax hike, Chile joins the long list of Latin American and European countries that impose taxes on foreign digital platforms and companies, risking a trade war and a worsening of the relationship to the U.S. while hurting their own digital and innovation economy.