Mumbai: Online streaming major Netflix to file an appeal before the income tax appellate tribunal against the Rs 196 crore tax demand raised by the taxmen over alleged tax evasion. Netflix's move comes after the Dispute Resolution Panel (DRP) earlier this year ruled in the favour of the department allowing the tax demand raised by its international taxation wing.
The IT department had contended that Netflix Entertainment Services LLP acted as a dependent agent permanent establishment (DAPE) of Netflix. Total revenue generated by the company’s operations between April 2020 and December 2020 was above Rs 1145 crore of which Rs 1008 crore was profit and the attribution to Indian operations was calculated at Rs 503 crores.
“Netflix offered Rs 13.36 crores and remaining profit which is attributed to the operation carried out of India through PE arrangement in India, is taxable in the hands of Netflix. The amount was calculated to Rs.490 crores and the demand raised on the said amount stands at Rs 196 crores,” confirmed a senior tax official.
A Netflix spokesperson in a statement said, “We fully adhere to tax laws and their requirements globally,” without further elaborating on the IT case.
The tax department had further contended that the open connect appliance (OCA), a content distribution network specifically developed by Netflix to deliver its TV shows and movies to avoid the traffic and fees, was based out of India, hence it is liable to pay taxes here as it was operated from India.
“The department’s contention was accepted by the DRP, which ruled in its favour, but following which the company is likely to file an appeal before the ITAT. In the event the ITAT rules in the favour of the department, it has the option of moving before the High Court against the order,” added another official.