‘Netflix’ tax fury boils over as locals seek level playing field

Australian small businesses are frustrated over the introduction of the “Netflix tax”, with claims the government is failing to properly crack down on multinational tax avoidance.

As Australian consumers prepare to fork out up to 20 per cent more for digital services, business owners are calling foul, declaring the tax still allows multinational companies to exploit loopholes and pass the tax burden on to locals.

The new tax will make overseas businesses liable for the GST on digital services provided to consumers only.

Business-to-business transactions will be exempt, meaning non-residential companies such as Eventbrite, Slack and Amazon will not charge GST to Australian businesses, but will pass the burden of reporting this GST to them.

Australian business owners are calling for a level playing field, suggesting multinational companies with local teams and offices should not be allowed to classify themselves as non-residential businesses.

Jeff McAlister, CEO of online ticketing platform TryBooking, said the government needed clear definitions on whether international companies have an Australian presence or not.

“The state governments have welcomed and attracted multinational companies with large incentives to set up in Australia, and while it’s been great for boosting the economy and generating local employment, they should compete on an equal basis,” Mr McAlister said.

“If they have sufficient operations to warrant GST compliance, then the government should enforce they are an Australian entity rather than allowing invoicing
from the US or a low-tax
nation to minimise corporations tax.”

Darcy Naunton, co-founder of York Butter Factory, said there was no reason a software company should be exempt from GST because of where they originated.

“We’d like to see local software and technology businesses thrive. The starting point is a level playing field in terms of how they are taxed. It’s then on the local businesses to prove they can deliver world-class technology, products and customer experience,” Mr Naunton said.

“The ‘Netflix tax’ on international tech firms levels the playing field for
international players and their local competitors, so we welcome the government to close that gap.

“However, Australia must do more to closely manage this or look at closing loopholes for companies who are trying to dodge this, potentially at the expense of local players.

“We fully expect these costs will be passed on to the consumer.”

The “Netflix tax” is estimated to generate $350 million in revenue from July 1 this year .