Australia to introduce 'Netflix Tax' in July

DetailsRebecca Hawkes | 12 May 2015

The Australian Federal Government has confirmed that consumers will be required to pay, from 1 July, an extra 10% for digital goods bought online from overseas services such as Netflix, Google, Amazon and Steam.

The 'Netflix Tax' will be charged to all digital products and services bought online, such as films, TV series, games and books. The Goods and Services Tax (GST) will not apply to physical goods under the value of A$1,000 purchased online.

"What we're doing is going to digital providers overseas and saying 'can you apply the GST to the products you provide into Australia?'," Treasurer Joe Hockey told reporters.

"They are agreeable to it. It's not their profits [being taxed]. It's a tax collected and they remit it back to the country where that occurs."

Netflix launched its subscription video-on-demand service (SVOD) in Australia earlier this month, at a lower price point than many local players including Stan, the Fairfax Media and Nine Network joint venture, and Presto from the Foxtel/Seven West Media partnership.

Australia's broadcasters have welcomed the move.

"The government's move to enforce GST for the supply of digital content services is the right one. The digital marketplace is an increasingly competitive space and it's critical to ensure that all players that do business in Australia do so on a level field, with no one player advantaged through tax loopholes," said Bruce Meagher, group director of corporate affairs, Foxtel.

"The introduction of this legislation will not only help to maintain consistency across the competitive landscape, but it will also ensure that Australia gets its due taxes from the companies that choose to do business here, which benefits all Australians."

This redrafting of the Tax Act would raise A$350 million over four years, said Hockey.