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How Netflix Screws You & It’s 100% Legal

Netflix Australia has been exposed, the big US content giant who bowled into Australia back in 2015 has paid just $341,793 in tax despite gouging between $600 Million and $1 Billion in revenues with questions now being asked of the Federal Government as to why foreign Companies are still allowed to get away with this.

Currently the Australian Tax Office stands accused of serious allegations that they have systematically been unfairly targeting small business. A recent IGTO reports ­focused on the ATO’s allegedly heavy-handed use of garnishee notices to forcibly recover revenue from businesses and individuals. Now questions are being raised as to “Why small business and not foreign corporations”.

Last financial year after collecting another $600M+ Netflix only paid $175,515 in tax.

To put this into prospective 4Square Media who publish ChannelNews paid more in tax than Netflix and we employ more local people.

Until 2019, Netflix barely had a physical presence in Australia.

It’s only recently that Netflix has decided to invest in local personnel according to the Australian Financial Review.

How Netflix get away with this minimum payment of taxes which is 100% legal under current tax laws is that they use a corporate structure which allows a Netherlands-based subsidiary to recognise the hundreds of millions of revenue earned here.

It’s tax bill for 2018 amounts to about 0.06 per cent of the lowest estimate of its Australian income, or 0.04 per cent at the upper end.

Consumers who pay a monthly Netflix subscription In Australia are billed by Netflix International BV, a private company based in Amsterdam, Netherlands.

This operation is a subsidiary of the US-listed Netflix who are raking in hundreds of millions without paying tax.

“We comply with all Australian and international tax law,” a Netflix spokesman said.

The Financial Review has called into question how effective the Australian government’s tax reforms have been in getting digital companies like Netflix, Google and Facebook to recognise the money they earn from Australian consumers and businesses in Australia.

This is not new back in 1996 I exposed how Intel was stripping money out of Australia and not paying tax on hundreds of millions.

Netflix Australia acts as a collection, payment processing and content delivery support business. It charges a fee to Netflix International BV for those services.

Netflix International BV paid Netflix Australia a service fee of $12.1 million in 2018, up from $6.5 million in 2017, forming all its locally recognised revenue, according to documents filed with the Australian Securities and Investment Commission.

Nathan Burman the new head of communications at Netflix has not commented for this story.

The AFR said that as of December 31, Netflix Australia was still holding onto $21.6 million in revenue it had collected from Australian consumers on behalf of Netflix International BV.

Netflix previously confirmed to the Financial Review that Netflix Australia collects more than $100 million from local customers on behalf of Netflix International BV, but it does not recognise that revenue in Australia.