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OTT might equal ‘Over The Tax’ quips analyst

In a little paper bringing together all the evidence, Tricarico says pressure for new measures to tax over-the-top providers who telcos and other European companies say are unfairly competing with them, is building.Download here.

The European companies point out that these players are able to avoid corporation and value added tax by setting themselfves up in low tax jurisdictions such as Luxembourg. This accusation is not new and reached a clamourous peak about a year ago. TV providers also claim that in addition to not having to pay VAT the OTT players can often find themselves exempted from local content rules, seen as another big tilting of the playing field.

Then there is the slightly different argument, advanced forcefully just over a year ago, that Internet players don’t pay their share of network build costs. It all gets thrown in the pot.

Tricarico notes that conferences on the missing Google tax billions tend to be echo chamber affairs with no attendees from the over the top camp in the room. Not so much a discussion then, as a slightly misplaced rant.

He points out that, while the case for equal taxation is strong OTT’s, liberated from taxes, have played a big role in stimulating the growth of the online economy in terms of price, choice and innovation. Protectionism, however warranted, still stifles a market.

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