Netflix is allegedly funneling millions of international profits to tax havens

The Crown Season 3, Netflix
Source: The Crown Season 3 Official Trailer, Netflix | YouTube

Netflix has been allegedly funneling around $430 million of international sales into tax havens while receiving more than a million of tax relief in the United Kingdom.

Tax Watch, a British think-tank has released a report stating that like other big tech companies like Amazon and Google, there is evidence that Netflix has developed a system to avoid taxes.

Tax Watch’s report explains that an estimate bracket between $327 to $430 million worth of profit outside the United States was relocated to countries such as the Netherlands who have lower tax jurisdictions. The think-tank studies the streaming giant’s activities in the United Kingdom to showcase how Netflix has developed a system to lessen their taxes. Netflix Services UK oversees the streaming platform’s operations to the Netherlands where it collects revenue from their English subscribers.

In 2018, Netflix Services UK had a revenue of €48 million ($53 million), while having a profit of €2.3 million. This is not really the case though, as the UK branch’s financial footprint is way larger, with the think-tank having an estimated revenue of £860 million or $1.1 billion from the 10 million English subs that Netflix has.

Tax Watch has questioned the streaming platform’s financial structure as well as pointing out that they have been receiving tax reliefs in the UK for high profile shows like Sex Education and The Crown, shows that are produced by British companies and are filmed in the UK.

The think-tank believes that the Netflix financial conundrum has raised some concerns regarding the running of their highly-rated television tax scheme where it could be tapped into by companies to take credit for their production expenses.

Netflix has been a staunch supporter of the UK’s tax relief scheme, the reason being the streaming giant having invested half a billion dollars for over 50 British shows just last year alone, producing employment and apprenticeship opportunity for over 20,000 personnel.

According to one of Netflix’s spokespersons, the company is well aware of the corporate taxation issue and is also aware that the issue is well-contested. At the end of the day, it is the government that decides how the taxation rules go and that in each company that Netflix is operating in, the streaming platform makes it a point to adhere to those rules.

The complications of taxes regarding giant technology companies are the main reason why the UK is moving forward with a new digital services tax that will be launched in April where US tech companies will pay taxes of 2% of their revenue they make on their UK market.

What do you think about it?