According to a story from The Hollywood Reporter, Apple has reached a settlement in its legal dispute with Chicago over the city’s alleged “Netflix tax.” Targeting streaming services, the tax levied a 9 percent surcharge on “amusements that are provided electronically.”
The choice has taken a while to make. In an effort to make up for the money lost from conventional brick-and-mortar retailers, Chicago enacted the new tax in 2015. Apple was one of several organizations and businesses that objected to the law when it was challenged in 2018. Sony Interactive Entertainment, the Entertainment Software Association (ESA), a trade association for video games, and an advocacy organization for Netflix, Hulu, and Spotify were among the other parties to bring legal challenges.
Although the “Netflix tax” only contributes a small portion of the city’s $1.5 billion in annual tax collection, Bloomberg Tax adds that revenue has more than quadrupled in the last five years. The tax generated $9.4 million in revenue in 2017, $28.8 million in 2020, and $31.2 million in 2021 from the 47 enterprises that had registered in accordance with the regulations. When the pandemic caused the closure of physical premises, however, a large portion of the city’s other local business taxes was severely impacted.