The availability of Netflix, Amazon Prime Video and other on-demand content services in SA could be at risk if the government adopts a proposal that they pay licence fees to operate in the country.

A Weekend Argus report notes this contentious proposal is part of the government’s draft White Paper titled Audio & Audiovisual Media Services & Online Content Safety: A New Vision for SA (July 2023).

Chloe Castle, CEO of Dear SA said the proposal raised many questions.

‘The private streaming companies have made the delivery on the content, not the broadcaster. The consumer is already heavily burdened with layers of tax which is a concern,’ she said.

‘With their current failures and insufficient capacities, we are raising the question: What value add will the public broadcaster bring with collecting these additional licence fees?’ Castle added.

‘We pay for subscription services (plus VAT), and the data or Internet service (plus VAT), as well as buy the devices on which to view the content (purchase price plus VAT). In addition, private content providers are also taxed on income received.’

The Organisation Undoing Tax Abuse (Outa) said it was not clear how SARS would collect the levy.

‘How would they know who has a TV and who doesn’t, because otherwise it is just another tax and only taxpayers would then pay for TV licences. But it’s not only taxpayers who own TVs, so it becomes a prejudicial sort of cost,’ said Outa CEO Wayne Duvenage.

He said it was ‘crazy’ to tax companies like Netflix, because they were paying tax anyway, because they had offices in the country; but if there was a loophole and international business were earning revenue that left the country and escaped the tax net, then measures had to be implemented to address the problem.

He said SA should look at international best practice around streaming services.

SARS spokesman Siphithi Sibeko said the recommendation that Netflix and other streamers pay operating licences was a matter of principle.

Full Weekend Argus report