Netflix and other non-Australian technology firms may soon be asked by the country’s government to collect a 10% percent goods and services tax from their customers in the region. The details of the GST would be mentioned in the Federal Budget due to be announced on Tuesday next week.
GST on Netflix to ensure level playing field
According to a report by Fairfax on Thursday, the Australian federal government is planning to charge a 10% GST on intangible services, such as movies, music, books, etc., available online on the websites of outside companies, for instance Netflix.
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The GST has already been levied on other local digital services, such as Stan, Presto and Quickflix, and some of them have criticized Netflix for not paying the tax. Netflix in Australia already charges $8.99 per month for its services, which is cheaper than its competitors. But now the price is expected to increase as it will soon include 10% GST.
In this regard, one of the country’s treasurers, Josh Frydenberg claimed that such a development is aimed at providing companies, irrespective of their origin, an equal opportunity to do business in the country. Moreover, since the country is witnessing a growth in the digital and e-commerce segment, the tax system needs to adjust to the changes, added Frydenberg.
Limit remains the same
The imposition of GST will not accompany a reduction in the maximum limit of AU$1000 on imported goods exempted from GST. It is reported that Fryderberg will consult other state treasurers to lower the limit sometime later. Some are predicting the exemption to decrease to $500, however, Fryderberg may be looking to cut it down more. The United Kingdom has a threshold limit on imported products of 15 pounds, while Canada has a maximum limit of $20.
Australia’s expenditure review committee has claimed that the change in GST would require a bit of redrafting of the Tax Act, but would be easy to implement. Further, a review by ex-premiers Nick Greiner and John Brumby in 2012 indicated that the country loses $1 billion every year due to non-collection of GST-associated revenue on intangibles.
Alhough the government is looking to raise taxes on online goods, it has still not done much to force multinational giants such as Google and Apple to declare their earnings in the region. The government has reportedly dropped plans to levy a tax on these companies.