Netflix has risked raising the ire of a Federal Government looking closely at the taxation arrangements at multinational tech companies by confirming it would not charge Australian consumers GST on subscriptions.
The US giant confirmed to AdNews this morning that it would not charge GST on subscriptions, as it was not required to do so under Australian law.
“Netflix has been and will be compliant with all applicable laws and regulations, and we pay taxes as required under local and national law,” a spokesperson said.
“There are no local or federal rules requiring companies not based in Australia to collect GST on digital purchases.”
However, the treasury department is thought to be looking at the arrangements surrounding the taxation of overseas companies as sentiment against multinational companies shipping profits offshore continues to mount.
Rumblings about tax avoidance in the Australian market have been bubbling away for some time, and earlier this week communications minister Malcolm Turnbull indicated the government was seriously looking at ways it could reap revenue from tech companies.
The Australian media industry is under enormous pressure from online platforms, notably Facebook and Google,” Turnbull said.
“The modest amounts of company tax both companies pay in Australia has been a matter of great concern, here as well as in other countries, and there is a global discussion going on about how these internet age companies should be taxed in a matter that delivers a fair return to the countries where they make most of their money.”
He said the government was currently looking at charging GST on advertising revenue raised by the likes of Facebook and Google as part of a white paper into tax being prepared by the treasury department.
Representatives from tech companies which may be affected have told AdNews that any such changes are in very early stages, and no particular discussions with the government have taken place regarding the potential GST arrangements.
Some estimates have such a move raising $240 million for government coffers.
When the proposition that the government may be looking at tax arrangements was put to the SVOD giant, Netflix declined to comment further.
AdNews is currently seeking more information from the treasury department on whether Netflix is being looked at as part of the tax review.
The confirmation that Netflix would not charge GST on subscriptions also has the potential to irk rival subscription video on demand players such as Presto and Stan, whose joint venture partners are incorporated in Australia.
In response to the revelations, Stan did not comment and Presto simply noted that it “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”
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