Enforcing ‘Netflix Tax’ Will Be A Challenge In Australia

Enforcing ‘Netflix Tax’ Will Be A Challenge In Australia

Netflix is at the center of a debate in Australia where authorities are planning to come up with a GST for similar services. The so-called “Netflix Tax,” which requires overseas media and streaming services to pay GST, might not be that easy to impose in Australia, claims Anil Kuruvilla, a senior taxation expert at Thomson Reuters, according to a report from the Sydney Morning Herald by Jared Lynch.

Will Netflix raise its subscription charge?

Previously, Joe Hockey, treasurer for the country, came up with a plan to levy the GST on Netflix and other such companies which provide movies, TV shows, music downloads, etc. The plan also involved decreasing the tax exemption limit of $1,000 on goods bought overseas. Hockey claimed that such measures, being a part of overall tax integrity methods, would augment the country’s reserves by billions of dollars.

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In regards to this, Netflix stated that it would abide by the changes in GST, but it has not indicated whether or not it will raise its subscription cost in Australia. The U.S.-based on-demand streaming service currently charges $8.99 for its services in Australia, which is $1 less than its competitors in the country.

Not many options with government

However, Kuruvilla, citing the European Union’s recent changes to the VAT, suggested that accumulating taxes from technology companies is still a new thing, and the concept has already sparked a major criticism. Actually, not long ago, the EU decided to impose the VAT on broadcasting and electronic companies on the basis of the whereabouts of their consumers and not the location of their head offices. Due to this, companies are forced to collect and pay taxes in their home country, which further get distributed to other countries by local tax agencies.

But after just four months of its enactment, the law is already facing criticism in Europe as a lot of small businesses are finding themselves entangled in it, as claimed by Kuruvilla.

Further, the GST implementation could be problematic if a company decides not to pay it all, in which case, the government does not possess effective measures to counter such an action other than by complaining about it in the media, though this could prove to be efficient as big companies tend to want to avoid building a bad reputation. Nevertheless, nothing much could be said about the issue until Hockey actually implements the GST in Australia, which is due to be announced in May’s federal budget.

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