Chile is reportedly drafting a legislative bill that aims to impose new tax on multinational digital and e-commerce companies operating in the country.
The legislative bill is set to go to Congress later this year, reported Reuters, citing comments from the country’s Finance Minister Felipe Larrain.
“Obviously innovation and entrepreneurship are welcome. However, it is the government’s duty to ensure that everyone can compete on a level playing field,” Larrain told reporters.
The taxes will likely hurt American online retailing giant Amazon and other technology-based service providers like Netflix, Spotify, and Uber.
Although digital commerce companies have gained significant traction in the country, most of them have little or no physical presence in the country. And, above all, the Andean country is losing millions in taxes due to its existing law, which doesn’t tax the goods imported through e-commerce platforms.
In 2016, over 15 million packages ordered through e-commerce entered Chile, with a value of around US$390 million, but the government could not tax all of them, according to the Santiago Chamber of Commerce (CCS).
The minister says that the government does not dislike foreign digital commerce companies but it wants them to contribute to the country’s development.
Such taxes are already in place in other Latin American countries, including Uruguay, Peru, and Argentina.
“We are looking at other ways to apply tax, perhaps charge a transaction fee,” said Minister Larrain. “Initial estimates suggest that collecting taxes from the digital economy and digital commerce could bring in several hundred million dollars.”