Australian government eyes tax on Netflix

The Australian government may force digital companies such as Netflix that are based outside of Australia to charge GST to their Australian customers.
Written by Josh Taylor, Contributor

Australia's Assistant Treasurer Josh Frydenberg has said that the government will be looking to level the playing field for digital services by ensuring that those based outside of Australia, such as Netflix, collect the 10 percent goods and services tax (GST) from their Australian customers.

On Thursday, Fairfax reported that the federal government plans to impose the GST on so-called "intangibles" purchased from online overseas websites, such as books, music, TV shows, and films, and subscription services such as Netflix.

The GST is already applied to Netflix's rivals Stan, Presto, and Quickflix, as they are based in Australia, and some of the local operators had complained that they face a competitive disadvantage because Netflix is not paying its share of GST.

Frydenberg told ABC TV on Thursday that while the details will be revealed in the federal Budget on Tuesday, he believes that Australian companies deserve an equal playing field.

"Both [Treasurer Joe Hockey] and I have been quite consistent in our call in providing a level playing field for the provider of key services in Australia, whether they come from overseas or whether they're provided domestically, and this is an area that we've been working with international parters on, trying to get a good understanding of where Australia's tax system should be for the future, because we have a growing digital and e-commerce world and the tax system needs to stay up with that game," he said.

"If we don't, the taxpayer will be short changed, and that won't be a good outcome for either consumers or for taxpayers."

This will not mean lowering the AU$1,000 threshold for GST to be applied to imported goods. Frydenberg will reportedly ask state treasurers after the Budget next week to consider lowering the threshold as a separate measure.

While the government may be looking to charge consumers more for online services, it appears to be backing away from plans to force multinational corporations such as Google and Apple to declare their Australian profits in Australia. Fairfax reported on Tuesday that while Google and Apple would need to disclose more information about their local business, it has shelved plans for a so-called Google Tax.

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