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'Netflix tax' just the start, says Grant Thornton

The introduction of the ‘Netflix Tax’ bill to parliament signals the start of a long journey that will potentially see GST applied to as many aspects as possible across the broader economy, warns Grant Thornton.

'Netflix tax' just the start, says Grant Thornton
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Simon Coulton, national technology leader at Grant Thornton Australia, said the bill brings the tax system into the digital era.

“This is a logical step in recognising the way people now consume and is a clear example of local tax legislation catching up to the 21st century,” he said.

As a result, he added, mid-size technology providers in the Australian market will start to reap the benefits of an even playing field.

“Other parts of the world are up to date with tax rules on digital services. Our local mid-size technology service providers exporting their services into other jurisdictions are currently required to charge the GST equivalent when operating in those markets, as well as charging GST on services provided in the Australian market,” Mr Coulton said.

“The proposed legislation ensures a more competitive landscape for local technology service providers as it closes the gap, whereby foreign technology providers looking to sell services into the Australian market will also be required to charge GST on services they sell here.”

Grant Thornton believes these changes will have a broader impact on the Australian business community, with an extension of the base of the GST able to ensure there are no competitive disadvantages to operating in Australia as opposed to offshore.

All international service providers who currently receive a perceived benefit to domestic providers will be impacted by these changes, including suppliers of services to individuals and unregistered consumers of services, but the changes will not affect those offshore providers who supply to business.

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