Chicago’s personal property lease transaction tax law has expanded into cloud computing, as well as movie and music streaming, in a recent decision to charge a 9 percent tax for the privilege of these online services.
“Chicago recently decided they could earn more revenue by taxing cloud computing and Internet services," Illinois Policy Institute Vice President of Policy Ted Dabrowski told Illinois Business Daily recently. "This affects not only digital entertainment services, but also a growing number of businesses that rely on remote computer tools to power their operations.”
Small businesses and startups are particularly vulnerable to the new tax.
“The businesses that are most affected are those who use cloud computing to save money, predominantly startups and small businesses,” Dabrowski said. “There is now a 9 percent tax on services that were not taxed before. Chicago delayed the tax until January 2016 because so many businesses complained. They are not happy with Chicago reaching out and taxing this new part of the economy.”
The Chicago city website said the extension will allow businesses additional time to have questions answered and to make any necessary changes to their billing systems or other procedures.
Dabrowski said that Mayor Rahm Emanuel wants Chicago to be the “digital mecca of the Northwest, but this new tax is hitting the industry pretty hard, especially cloud computing, and startups are really upset. This new tax hurts.”