Netflix Paid No Corporation Tax In UK

Even after sufficient levels of sales revenue from British subscribers , Netflix hasn't paid corporation tax in UK.

Netflix is being criticized in the United Kingdom. As per reports in 2014, the on-demand internet streaming service provider did not pay corporation tax in UK despite of the estimation that it has almost 4.5 million subscribers in the country.

The video streaming enterprise behind prize-winning series, such as Orange is the New Black and House of Cards, is known for charging clients at least £5.99 per month for subscribing to its service, and has expanded rapidly since 2012 – the year in which it was launched in Britain. 

An investigation conducted by Sunday Times found out that the organization was able to generate £200m of sales revenue in UK last year but any earned profits from the European country were registered overseas. No one has suggested that the corporation has breached the law.

The publication has reported that most recent accounts of Netflix International BV, based in Luxembourg, shows profits worth £11.3 million and sales revenue worth £415 million in 2014 with British clients contributing to the biggest proportion of turnover. It stated the organization paid income tax worth £573,396 in Luxembourg, which equals a rate of around 5%.

Netflix stated that it is in “expansion” mode and suffering from overall losses as far as its global operation is concerned. An official stated its British subsidiary hires around a dozen people and paid some corporation tax in 2015, adding, “We are fully compliant with all applicable rules.”

In July, it was reported that despite of more than 65 million subscriptions across the globe third-party content‘s costs on Netflix was £5.2bn ($7.7bn), around 4.6 times its net turnover. Recently, it was reported Mondelez, which is known for owning Cadbury, did not pay any corporation tax in 2014.

In contrast, Starbucks, which was widely criticized for avoiding corporate tax in 2012, following the disclosure of meager contribution to tax revenue in recent times, has paid corporate tax worth £8.1 million in 2015, almost as much as it has disbursed in its first 14 years in the United Kingdom.

Britain is believed to be the largest market of Netflix outside the United States, which is known for having more than 40 million subscribers, with its British subscribers' figure expected to reach 9.5 million later this decade.

The organization is facing intense rivalry from competitors such as HBO, Hulu and Amazon in the United States. In Britain, the organization’s closest competitor is Amazon Prime.

The Labor Party has responded to Sunday Times’ report by pressurizing George Osborne to "get a grip" on the matter of the organization’s contribution to the British treasury.