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Chicago Begins Taxing Cloud Computing

Thursday Jul 2nd 2015 by Developer.com Staff

The 9 percent tax applies to IaaS and PaaS, as well as Netflix and Amazon Prime.

As of July 1, Chicago has begun levying a new 9 percent tax on cloud computing services. The tax is the result of two different laws. One applies to streaming entertainment services like Netflix, Amazon Prime, Pandora, Spotify and Apple Music; the other, which may impact many developers, applies to SaaS, IaaS and PaaS offerings.

Many questions about the tax remain unanswered. The city has said that while the tax goes into effect in July, it will not begin collecting money until September. It has not said whether end users or service providers will be responsible for paying the fees.

Industry watchers say the tax could spark a larger debate about whether local cloud computing taxes comply with federal laws and about whether cloud services should be taxed at all.

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