Netflix tax paves way for more to come

Offshore digital service providers will broaden the GST base as the tax system catches up to the modern world and the way it consumes goods and services.

As the as Federal Treasury today introduced its “Netflix Tax” bill to Parliament, outlining the treatment of GST on Digital measures, this signals the start of a long journey that will potentially see GST applied to as many aspects as possible across the broader economy.

“This is a logical step in recognising the way people now consume and is a clear example of local tax legislation catching up to the 21^st Century,” said Simon Coulton, National Technology Leader, Grant Thornton Australia.

Mid-size technology providers in the Australian market will start to reap the benefits of an even playing field.  

“Other parts of the world are up to date with tax rules on digital services. Our local mid-size technology service providers exporting their services into other jurisdictions are currently required to charge the GST equivalent when operating in those markets, as well as charging GST on services provided in the Australian market.

“The proposed legislation ensures a more competitive landscape for local technology service providers as it closes the gap, whereby foreign technology providers looking to sell services into the Australian market will also be required to charge GST on services they sell here,” said Mr Coulton.  

These changes will have a broader impact on the Australian business community. An extension of the base of GST will ensure that there are no competitive disadvantages to operating out of Australia as opposed to an offshore service provider.

All international service providers who currently receive a perceived benefit to domestic providers will be impacted by these changes, including suppliers of services to individuals and unregistered consumers of services, but will not affect those offshore providers who supply to business.

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For more information please contact
Helina Lilley, National Public Relations Manager
T +61 2 8297 2421, M  0437 725 520, E  helina.lilley@au.gt.com