Netflix won't charge Australians GST
Sparks are flying after
Netflix said it would not charge GST on the Australian
version of its online television service which launches
next Tuesday.
United States-based Netflix,
Quickflix, Foxtel Play, Presto and Stan, partly owned by
Fairfax Media, are locked in a bidding battle to secure
the best programs for their streaming television
services and to win over consumers in what is expected
to become a fiercely competitive market.
But
Netflix will have a 10 per cent cost-advantage over all
of the Australian-based services because it will not
have to charge viewers GST.
A company spokesman
said Netflix would not collect GST in either Australia
or New Zealand, where it is also launching a local
service, as it was "not a local entity".
"There have been discussions in both countries about
changing the law on this to collect even from non-local
entities, however that's something to look at in the
future," he said. |
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Stephen Langsford, chief executive officer of Netflix
rival Quickflix, told Fairfax Media "most Australians
would expect Netflix to pay their fair share of tax" and
that it was "more than odd" Quickflix had to pay GST but
not Netflix.
He added that it looked like Netflix had structured
themselves internationally to minimize tax.
"We note that their 'Australian' emails have an address
from The Netherlands," he said. The argument over
whether GST should be charged on digital imports, such
as online TV, music and games services that are hosted
overseas, flared up in January when Assistant Treasurer
Josh Frydenberg said the upcoming tax white paper will
take another look at the issue with concerns it's
costing Australian jobs.
Retail boss Gerry Harvey has also previously said that
the government should abolish the GST exemption on
imported goods, adding his voice to a chorus of
Australian companies against the tax-free threshold on
online purchases.
The tax status of Netflix's local service versus
Quickflix and other services looks set to highlight what
is at stake. Presto, owned by Foxtel, would not comment
directly on whether it thought it was unfair that
Netflix didn't have to collect GST, instead pointing out
that it did have to charge it.
"Presto fully complies with its GST obligations in
Australia along with all of the legislative and taxation
requirements, and will continue to do so for the life of
our business," a Presto spokesman said. A spokeswoman
for Stan declined to comment.
Andrew Pirie, spokesman for Spark, which owns internet
television service Light box in New Zealand, said it was
"yet another example of the lack of a level-playing
field in this rapidly changing digital world".
"Lightbox has been set up as a New Zealand-based
company, working under New Zealand rules and paying New
Zealand tax and we think other companies should be doing
the same," he said.
Netflix has registered a subsidiary in Australia that is
owned by another Netflix company overseas, but Victoria
University of Wellington professor John Shewan said that
would not necessarily be enough to make the company's
localized television services liable for GST in
Australia or New Zealand if the service was delivered
from overseas.
But Quickflix, Presto and others
like New Zealand's Light box could not avoid GST by
moving it overseas, because of their base being in
either New Zealand and Australia, he said.
The
Australian Taxation Office said it could not comment on
the affairs of individual companies.
But it made
note of the Base Erosion and Profit Shifting Action Plan
currently being developed by the Organization for
Economic Co-operation and Development, which is looking
at the taxation of intangibles as part of its focus on
the digital economy.
It is set to be finalized
in December. "This work seeks to understand modern
business models, to ensure international tax laws
capture modern technologies such as the delivery of
digital supplies," a spokesperson said.
South
Africa became the first country to "go it alone" in
June, when it required overseas firms to register for
GST on electronic services they supplied to South
African customers.
Source:
Sydney Morning Herald , Australia, dated 18/03/2015
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