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The Department of Communications and Digital Technologies says it plans to enforce quotas for local content on streaming services like Netflix.
In a parliamentarian presentation, the department’s chief director of broadcasting policy, Collin Mashile, said local content should be “empowered” by more political interventions within the audiovisual broadcasting space.
“Where video-on-demand subscription services come and operate in South Africa, whatever they show South Africans in terms of their catalog, 30% of that catalog must be South African content,” Mashile said.
“What this means is that we are trying to create opportunities for the production sector and the creative industry.”
While South Africa has a history of local content quotas for the government-owned SABC, this will be the first time multinational companies have come under attack.
The move is likely to drastically affect the type of content currently available on Netflix in South Africa, although a move like this by a government is not entirely unprecedented.
In January 2020, the French government said it is finalizing a bill to force the video-on-demand services of Netflix, Amazon.com, Apple, Walt Disney and others to invest at least 25% of their derived revenue in the country to finance premises. productions.
French law is governed by a European Union directive that requires such companies to ensure that at least 30% of their catalogs are made up of European-made content. Bloomberg reported.
The rule is part of France’s broader push for what it has called its “cultural sovereignty in the digital age.” Its aim is to boost national traditional media players in the face of the growing success of foreign entertainment platforms.
Digital tax
Like France, South Africa is also considering a digital tax on global companies like Netflix, Amazon, and Facebook, which operate in various countries around the world.
President Cyril Ramaphosa’s 4IR Commission has proposed the tax, stating that it is a “priority” for South Africa to actively participate in international efforts to ensure that technology companies pay a fair share of taxes in the countries in which they operate.
He said that key infrastructure and other subsidized services and state investments can only be financed sustainably if tech companies cannot avoid and evade taxes in the way they currently do.
He cited tax avoidance techniques such as transfer pricing and the sale of intellectual property to tax havens where profit accrual is allowed, with little or no accrued tax in the countries where the companies actually operate.
This avoidance is increasing the enormous inequality within and between nations that has characterized the 4IR to date, he said.
The commission said the government should adopt a digital tax bill, pointing to similar legislation that was announced in Turkey in 2019 and entered into force on March 1, 2020.
Under Turkey’s new tax, the turnover generated by certain digital services is subject to a digital services tax of 7.5% in the country.
France is considering imposing a 3% tax on digital giants like Netflix and Amazon, stating that this move “has never been more necessary.”
Many other European countries are looking to do the same, and South Africa may consider this example as additional motivation for implementing a digital tax.
Another reason South Africa may consider imposing a tax on major international companies operating locally is to make up for a deficit in its budget, which has been decimated by the COVID-19 pandemic.
However, the willingness of many countries to impose a tax on companies like Netflix is inhibited by the lack of a unified approach.
Many nations are waiting for the Organization for Economic Cooperation and Development (OECD) to design a unified digital tax approach to be adopted globally to prevent more countries from unilaterally imposing a digital tax.
When you last asked about the tax you paid in South Africa, the streaming service pointed out that it was already paying VAT in the country.
Licensing
One measure that could prove more problematic is the proposal by the Department of Communications and Digital Technologies to extend the payment of TV license fees to include streaming services.
the proposal it is included in the department’s white paper on the Audiovisual and Audio Content Services Policy Framework, which is currently open for public comment.
In terms of the Broadcasting Law, the public is necessary pay a TV license fee to watch “streaming services” that includes subscription services like DSTV. The purchase of a television, regardless of whether the South African Broadcasting Corporation (SABC) is seen on it or not, requires the payment of a license fee for any “broadcasting service”.
In the “traditional” sense, a “streaming service” is limited to content that is viewed on a television.
Given the emergence of streaming services such as Netflix, Apple +, Showmax, Amazon Prime, and others, the White Paper expands the definition of “streaming service” to include online streaming services.
By implication, that would require paying a license fee to view any “streaming service” that would include streaming services, regardless of what device it is viewed on.
Read: Big drop in TV license payments as SABC pushes new ways of charging
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