The government has introduced a bill to implement what has been dubbed the ‘Netflix tax’: An expansion of the GST to apply to digital services consumed by Australians but provided by overseas suppliers.
Treasurer Scott Morrison today introduced the Tax and Superannuation Laws Amendment (2016 Measures No. 1) Bill 2016 in the House of Representatives.
The bill is “an important part of the government’s program to level the playing field for Australian businesses and restore integrity to Australia’s tax system,” the treasurer said.
Morrison said the government is committed to a tax system “that ensures that those businesses that are operating in this country and are delivering services and products in this country meet the expectations of the Australian public in terms of the taxes that should be paid on the delivery of those goods and services in this country. ”
The bill will ensure that “everyone pays the right amount of tax” and will “ensure Australian businesses selling digital products and service are not disadvantaged relative to overseas businesses that sell equivalent products in Australia.”
Then treasurer Joe Hockey ahead of last year’s budget revealed the government’s intention to change the GST rules relating to digital products.
If the bill is passed, the change in GST rules is expected to bring in $350 million over two years after it kicks in on 1 July 2017.
“With the introduction of this bill, the government will require overseas vendors, many of whom are multinationals, to collect and remit GST on the sale to Australian consumers of their digital products and services,” Morrison said.
The scope of digital goods and services covered by the bill will include apps, subscription software and downloaded digital content such as movies, games and music.
The treasurer said that Australia has been working with the G20 and the OECD to addresses weaknesses in the current tax rules that create opportunities for base erosion and profit shifting. The government has also sought to crack down on corporate tax avoidance.
The EU has implemented a model of collecting consumption tax in the destination country for digital goods and services and other countries including New Zealand and Japan are in the process of developing similar rules, Morrison said.