Apple Will Soon Collect A 'Netflix Tax' From Chicago Streaming Subscribers

Apple Inc. AAPL will collect taxes on its streaming service in Chicago as a part of a settlement surrounding the so-called “Netflix Tax.”

What Happened: The Tim Cook-led tech giant will collect an amusement tax beginning Sept. 15 from customers in Chicago, reported Apple Insider citing Bloomberg Law. 

This concludes a four-year legal spat between Apple and the Windy City government over Amusement Tax Ruling No. 5, which has been dubbed the “Netflix Tax.” The 2015 revenue program imposes a 9% levy on streaming music, video and gaming services.

As part of the settlement, Apple will not need to pay back taxes as a part of the settlement.

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Why It Matters: Chicago imposed a 9% tax on streaming services like Apple TV+, Apple Music, Netflix and the service run by Spotify Technology S.A. SPOT in 2015. 

The iPhone manufacturer's bid to overturn the amusement tax was dismissed by the Cook County Circuit Court Judge Daniel Duffy in March, according to a prior report.

Apple had argued in the original complaint dating back to 2018 that the tax was unconstitutional on both the state and federal levels.

While dismissing the complaint without prejudice, the judge said Apple could file a second amended complaint within 35 days. The company had earlier amended its lawsuit to say it was directing an “as applied” challenge to the tax instead of a “facial” challenge.

Price Action: On Tuesday, Apple shares rose 0.4% to $173.75 in the after-hours after closing largely unchanged in regular trading, according to data from Benzinga Pro.

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