Entertainment tax

Entertainment tax also sometimes referred to as "amusement tax" is any tax levied on any form of commercial entertainment, such as movie tickets, exhibitions, sport events and more. The specific rules such as the tax rate of entertainment tax and cases of tax exemption are subject to local authorities, as is their collection. The entertainment tax has in the most cases the form of indirect tax, which is levied on buyer. Nowadays, the most discussed subject of those taxes are their implementations to online services, especially the ones working on streaming basis such as Netflix, Spotify and others.

In March 2011, Rajasthan become the first state to exempt theatres from entertainment tax. In March 2009, the Rajasthan government started levying an entertainment tax of 23.08 per cent on gross and 30 per cent on net sales. Earlier in 2008, the government had reduced the entertainment tax from 40 per cent on net to 30 per cent on net sales.

In Chicago, the entertainment tax is known as the amusement tax. Nowadays, the amusement tax is levied on cultural events (performances, exhibitions, etc. ), commercial events (promotional shows, presentations), sport events of any kind (car races, tennis, horse races, etc. ), entertainment activities for public participation or attended based on paid membership (sport clubs, etc.) and virtually provided amusement services (paid television programmes, etc.) based on streaming basis. The general exemptions are events with religious purposes, events to support the veterans and generally all non profiting events. The City of Chicago offers at their online site templates for amusement providers to be filled as well as complete guide regarding the amusement tax and the liabilities.

The amusement tax in Chicago has been in effect since 17 February 1986 and has gone through several amendments. It is assigned to section 4 156 in Chicago municipal code. In 1999 the tax rate for middle sized (750 5,000 people) events was reduced to 3%. Although, the first major amendment was in July 2004 where the original concept was enlarged by above mentioned paid television programmes and paid membership activities. The largest and nowadays most discussed amendment came into effect on 1 July 2015. It introduced a general 9% tax rate with exception for registered reseller for whom the rate is 3% and since 2018 the rate was decreased to 5% for cultural performances which are held in auditoriums with maximum capacity exceeding 750 persons. This rule was changed later that year and now there is total exemption from the tax if the event is live performance and the capacity is less than 1,500 persons. However, the controversy part of this amendment was including the digital streaming and online entertainment platforms as well (Netflix, Spotify, etc. ), this expansion is often referred to as "Netflix tax" or "Cloud tax". However, this affects only temporary services, e. g. the music tracks, movies, games and other online goods bought online and downloaded permanently are not subject to this tax (it is subject to digital sales tax, which in the state of Illinois is equal to 6.25%).

The new enlargement for "Netflix tax" was predicted to bring $12 million to the treasury of the city and help to decrease the city's budget deficit which was in 2016 around $500 million. However, the new amusement tax is subject to widespread criticism because of violations of other federal laws, state laws and precedent of the Supreme Court. Besides what is mentioned above, this taxation also violates the Internet Tax Freedom Act on the Federal level and the Commerce Clause. As for the State level, the Department of Finance executives are in clash with Illinois' executives and the uniformity of requirements is therefore not existing.

Entertainment excise duty was payable on some theatre, cinema or sporting events. Imprinted excise stamps on such tickets are known from the 1950s to the 1980s.

South West Africa introduced entertainment tax by Ordinance 11 of 1930, and issued revenue stamps to pay the tax.

The Ottoman Empire introduced an entertainment tax in 1906.

The UK introduced an entertainment tax with the Finance (New Duties) Act 1916.