Netflix Inc. is the biggest brand in the TV industry since 2007. The streaming giant rules the industry in every single country it has expanded its service. It seems that there is one major problem with the company’s UK operations. According to Independent, the streaming service platform generated massive revenues of £200 million in United Kingdom only; however, it is believed that Netflix has paid no corporation tax as of yet. The newspaper investigated and expressed concerns regarding not paying any corporate taxes regardless of generating high revenues.
The streaming service provider has been influential in the UK TV industry, as it has easily built a viewer base of more than 5 million subscribers in the region. However, the claims of these investigations will put the company under heavy inspection and will be listed in the list of those multinational firms who are scrutinized over their tax structures. All of this came in front after the famous Sunday Times posted Netflix’s account analysis for its programming that includes House of Cards, Orange is the New Black, and others.
The investigation of the newspaper further claimed that all the profits Netflix generated in the United Kingdom through these customers last year were controversial. All of the consumers subscribed through an overseas Dutch company known as Netflix International BV.
This is a clever move. All accounts of this Dutch company are based in Luxembourg. The accounts for the year 2014 showed profits of £11.3 million and a net turnover of massive £415 million. This turnover was largely contributed by the UK consumers who paid £5.99 or more for one month to access the streaming service. Sunday Times further said that the company did pay tax in Luxembourg due to managing accounts in the region but only 5% of it, which was £573,396.
The publication stated, “The European Union has implemented legislation aimed at tackling tax loopholes for multinationals and Netflix is now paying VAT in the UK, the bill for which is forecast to be £70 million this year”.
According to sources, it is believed that Netflix has promised to pay some of the ‘corporate’ taxes by the end of this year, whereas the remaining debt will be carried forward next year. The concerned department will be thoroughly inspecting over this issue and said that all rules will be applicable for the company. The streaming giant generated $5.5 billion in revenues and $267 million in profits last year.