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Chicago to charge tax on streaming services like Netflix

The tax will take effect in September. Those in Chicago who use streaming services such as Netflix will be subjected to a 9 percent Cloud Tax. The tax is an extension of the Amusement Tax, which taxes entertainment industries such as sports and cinema. The city council voted in favor of the extension on Wednesday, and they expect the tax will bring in around $12 million per year.

The tax also extends to online gaming.

Elizabeth Langsdorf, a spokeswoman for the city, said that this ruling is consistent with the current tax law and it is not an expansion of the laws. She continued to say that Chicago has issued a limited official guidance on digital access to entertainment and information, and as a result of this, some online providers have collected amusement tax, some lease tax and some no tax.

The ordinance says that in order to figure out if tax should be levied upon consumers, the city will use their billing address.

Edward Kleinbard is a tax professor in California, and he said that he has never heard of such a tax anywhere else in the country. A corporate law firm, Reed Smith, said this was just an attempt to tax the cloud more directly, as well as more comprehensibly than any other jurisdiction in the United States.

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