Entertainment tax

The Maharashtra government imposed an additional 10 percent entertainment duty on movie tickets priced between Rs.251 and Rs.350 from January 16, 2013. However, tickets costing between Re.1 and Rs.250 will see no fresh levy.[3] The government has also allowed theatre owners to collect Rs.11 as service charges on all tickets, up from Rs.6 now. The new tax slab is somewhat like this: If a multiplex or theatre owner charges up to Rs 250 per ticket, he will not have to pay any additional surcharge.

If a ticket is priced between Rs 251 and Rs 350, the theatre or multiplex owner will be charged 10 per cent more; if a ticket is priced between Rs 351 and Rs 500, the owner will have to pay 15 per cent more, and if the ticket is priced more than Rs 501, the charge will be 20 per cent more. Mirror has learnt that theatre and multiplex owners will have to go for computerised booking system so that the number of tickets sold is on record.[4][5] The Central Government's decision is effective from this month, and film and TV actors will be charged 12.36 per cent service tax on their earnings on programmes and endorsements.[6]

As per the new slab, for tickets up to Rs 250, there will be no additional tax other than the existing 45 per cent. For tickets costing Rs 251–350, government will charge 49.5 per cent entertainment tax. For tickets priced at Rs 351–500, the new tax will be 51.75 per cent, while tickets costing Rs 500 and above will attract 54 per cent tax. Maharashtra has 64 multiplexes. The state is expected to get additional revenue of Rs 30 crore in its coffers.[7] Maharashtra has 64 multiplexes and 549 single-screen theatres. The cabinet has also approved to give a five-year tax exemption to single-screen theatres under municipal councils and a seven-year exemption in rural areas.[8][9] Service tax is 12.36% and Maharashtra VAT is 5% on non-theatrical. The total tax in Maharashtra is 45% as entertainment tax, 5% VAT on non theatrical and in addition there is a stamp duty on the agreements entered in Maharashtra. The VAT on theatrical was waived from May 2011 but there is still a past issue from 2005 to 2011 which the government is yet to exempt.[10][11]ok the main taxing jurisdiction may exempt foreign-source income from tax, the main taxing jurisdiction may exempt foreign-source income from tax if tax had been paid on it in another jurisdiction, or above some benchmark to not include tax haven jurisdictions, the main taxing jurisdiction may tax the foreign-source income but give a credit for foreign jurisdiction taxes paid.

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.[12][13][14][15][16]

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.[18] 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%).[19]

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.