Chile May Tax eCommerce Companies 19 Pct
Chile is considering a 19 percent tax on multinational eCommerce companies like Amazon, Netflix and Uber.
Finance Minister Felipe Larrain made the announcement on Thursday (Jan. 10), and if it comes to fruition, the rate would be almost double what was originally proposed, Reuters reported.
The Chilean Chamber of Commerce, the Confederation of Production and Commerce and the Organisation for Economic Co-operation and Development (OECD) are all backing the tax rate. The amount would mirror the value-added tax that Chilean companies already pay.
Chile’s president, Sebastian Pinera, had proposed a 10 percent rate as part of a larger tax overhaul in the country, but the OECD suggested the 19 percent rate, and it’s currently being evaluated by the government.
“We are going to discuss with members of the (congressional) Finance Committee and we are open to dialogue,” Larrain said, stressing that the government hadn’t made a decision yet.
The government in Chile said companies outside of the country should be contributing to its development, even though the digital economy has already been helpful to the area.
Amazon has met with Chilean officials on the legislation, Reuters said.
Other regions have also looked to tax Amazon to help the development of certain areas. Last year, Seattle’s city council approved a tax on the city’s biggest companies, including Amazon, to help fight a growing housing crisis affecting the working class.
The crisis was related to the economic boom that increased local real estate costs.
The new tax was passed with a 9-0 vote, and would affect most companies grossing at least $20 million a year. At 14 cents per employee per hour worked within the city, the new tax would cost companies about $275 annually for each worker.
This “head tax” formula will generate $45 to $49 million per year over five years to build more affordable housing and to provide support services for the homeless. The tax would end after five years unless the city chose to renew it.