The Mexican government has ordered an increase of value-added tax to digital platforms. Netflix will start to add up to 16 percent to its subscribers starting in June as directed by the government, according to a recently published article.

The Booming Industry of Netflix in Mexico 

Netflix, the biggest online video streaming service in the world, has found its new home in Mexico because of its increasing subscribers in Latin America. Different movies and series that are using Spanish or Portuguese as a medium has increased on the streaming site.

This puts Netflix at an advantage compared to other digital video services. From real-life stories, fictional series, documentaries, and more. It is also undeniable that the number of subscribers in Mexico and Latin America, in general, has spiked over the past few years.

In 2019, Netflix had an estimated 31.4 million subscribers in the region. It doubled the number of its clients in the previous year. It is no wonder why the region is the top priority of the biggest online video streaming in the world.

In an attempt to maintain its boom in Latin America, Netflix opened a headquarters in Mexico. They still have their headquarters in the United States.

It was also reported in January of this year that Netflix will be spending almost $200 million for the production of several Mexican series. In an official statement, Netflix said: "Consumers across the region have joined Netflix. With Mexico City as our base, we will be closer to the creative community and members throughout the region as we continue to invest in the best content of its kind that is appreciated in Latin America and around the world." 

Mexican Government Orders to Increase the VAT of Netflix

Digital services like Netflix have been seen by the Mexican government to be significant in boosting the country's economy. Moreover, the Mexican government announced that an additional VAT would be ordered on Netflix.

In a statement released by Netflix, they said that up to 16 percent of VAT would be passed to its subscribers, while half of it will be taken by the streaming site starting June. When this was announced, experts wonder if the tax ordered to the companies then pass half of it to the consumers was too high.

However, despite the increase of subscriptions that may occur in June, Netflix believed that those who are staying at home or indoors in Mexico would not cancel their subscriptions. 

Netflix said: "The Mexican government is adding VAT to digital services like Netflix from June 1. We have started notifying our members that we will adjust our prices accordingly, while also working to minimize the impact on our basic plan."

Just early this year, aside from the increase of subscribers of Netflix in Latin America, the digital streaming site has recorded a rise of 15.8 million subscribers during the first quarter of this year. Amid COVID-19, Netflix has helped to entertain people while most are following the stay-at-home policy. 

Read a related article: Mexico is the New Haven of Netflix in Latin America