“Netflix Tax” On Its Way For Digital Products
Hockey today stated the move is designed to ensure there “is a level playing field for the suppliers of digital products and services in Australia in relation to the GST”.
“It is plainly unfair that a supplier of digital products in Australia has to charge GST and an offshore supplier does not,” Hockey stated.
“When the GST legislation was drafted it did not anticipate the massive growth in the supply of digital goods, like movie downloads, games and e-books from overseas.”
Hockey said the OECD has recognised this as a problem for some time, with a number of companies working constructively with governments.
“What we are doing under this proposal, which is a global proposal, is going to digital providers overseas and saying to them, can you apply the GST to the products you provide into Australia or in the case of any other country that has a consumption tax,” Hockey stated.
“These companies are agreeable to it. They’re actually agreeable to it, and why? Because they actually don’t pay it, it’s not their profits, it’s a tax that is collected and they remit it back to the country where that occurs.”
Revenue created from the initiative is expected to be $350 million over the next four years, Hockey said, with every dollar going to the states.
The Australian National Retailers Association (ANRA) stated top online and store retailers have welcomed the treasurer’s announcement.
ANRA CEO Anna McPhee said “retailers are encouraged by the federal government’s first steps”, however stressed that “intangibles are just one aspect and goods also need to be acted on to address tax integrity fully”.
McPhee stated it must be ensured that similar types of goods and services consumed domestically are taxed in the same way, no matter how the purchase occurs.
“GST on music, books, video games or fashion is not a new tax, and without action what is currently $1 billion in foregone revenue from goods and services will continue to rise as global providers of products and services focus more on marketing in Australia,” McPhee stated.
“The government’s action finally recognises how the digital economy has changed Australia since the introduction of the GST in 2000 and further highlights the importance of a well-functioning tax system.”