Mexico. Increasingly, the offer that configures the ecosystem of audiovisual content is expanding, which, as a form of entertainment and / or access to informative, cultural and educational content, continues to multiply thanks to the incessant advance in information technologies.
In our country as in the rest of the world, it is striking the continuous multiplication in the number of bidders and the market share reached by those digital platforms of content over the Internet, called 'Over The Top' (OTT for its acronym in English), mostly those from abroad.
Let's look at it in numbers. Certainly, it is free-to-air TV that continues to be the service of access to audiovisual content par excellence (92.9% of households have access at the end of 2018). However, recently OTT platforms have been gaining ground in the access and preference of audiences.
The growing competition for attraction and capture of audiences has resulted in the hiring of OTT platforms among households went from 1.6% of the total in 2011 to 24.8% in 2018.
Among those that stand out, Netflix, an American content player, already has 9 out of 10 subscribers in this market, well above the participation of national companies such as Claro Video, Blim, FilminLatino, among others.
It is precisely the players from abroad who have benefited from a fiscal and regulatory framework that does not yet contemplate their operation.
Its operation in Mexico and the rest of the world has not yet adapted its tax obligations (i.e. tax ladder) and regulations with those of the rest of its national competitors.
Unfair competition?
Indeed, we are in the presence of a scenario of unfair and inequitable competition for our producers and national content companies, a circumstance that, among many other effects, undermines the development of the Mexican industry.
There are various experiences and international recommendations that seek and point to the gestation of a competitive balance between content players.
In this regard, international organizations such as the OECD, OAS, ITU and CET. LA proposes the updating and modification of national regulatory frameworks to level the competitive terrain in the face of the irruption of foreign digital players.
In essence, they propose to standardize tax and regulatory burdens with national companies. From this and even on their own initiative, various legislations around the world have been given the task of regulating foreign OTT platforms as a way to establish a balance and boost the development of their national industry.
It is worth noting that within the regulatory tools that have been used, it has been chosen to apply the Value Added Tax (VAT) as a mechanism to update the base of taxable subjects and at the same time level the playing field with national content players.
In Mexico, recent parliamentary initiatives and those of the Ministry of Finance and Public Credit (SHCP) aim to leave behind the scenario of legal vacuum and regulatory laxity to achieve competitive equity in the audiovisual content market. This is based not on the creation of excise duties or new levies, but on the simple application of VAT to foreign digital platforms and services.
This fact would imply a recovery of resources from the public treasury of $3,600 million pesos per year, an amount equivalent to almost six times that allocated to the Priority Program "Internet for All" in 2019.
It is time for us to leave the fiscal delay for the digital world of 7 years and our country joins the list of nations that have dedicated efforts to find a competitive balance for innovation, investment incentives and development of the national audiovisual content industry.
Another case of tax equity, for competitive equity.
Text written by Ernesto Piedras of The Competitive Intelligence Unit.
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