Pay ‘Netflix Tax’ To Avail Online Services; Federal Government To Impose GST On Online Services And Purchases

‘Netflix Tax’ is what users have to pay now if they avail any online services as the Abbott Government is in plans to impose Goods and Services Tax (GST) on offshore sales transactions made online. In order to generate more revenue, Federal Treasurer Joe Hockey along with state treasurers, consented the idea of imposing GST on downloaded movies, music and books or any goods purchased online from overseas, which is valued below $1000, as per reports.

Implementation of GST on goods purchased from international sites could inject $400 million to government treasury, reports The Sydney Morning Herald.

As per the latest tax reform that is called the ‘Netflix Tax’, 10 percent GST will be imposed on content streaming services, app downloads, purchase of eBooks, purchase of songs, movies, TV episodes through Google Play Store or iTunes, reports CNET.

How will the GST impact the international companies dealing with Australian markets?

International companies have been doing business across various geographies with the help of the digital medium. With this indigenous companies are facing serious competition from their rivals based in different geographies. Apple’s spokesperson told The Financial Review, Apple downloads will not be affected due to the tax reform as the company is already paying GST on all its sales in Australia, which includes iTunes downloads of music, movies and books.

The Financial Review report also quoted a Netflix spokesperson saying, the company would collect GST from its customers in Australia, if the government changes the tax rules.

Joe Hockey told CNET, a company delivering intangible services into Australia should charge GST on those services. As per Hockey, many companies are prepared to charge GST on the services they deliver to Australia, provided they are not at a ‘competitive disadvantage’.

Are consumers the soft target?

The Netflix tax will make the availability of online services dearer for Australians by 10 percent. Getting a good deal for any goods sold online will now be difficult for Australians. An report on ITWire says, “hiking the GST beyond 10 percent or extending it to basic provisions like education, fresh food is politically impossible. So the government is looking at other ways to do it.”