Netflix will not charge Australians GST with questions now being asked as to whether they will use a tax haven to minimise their tax payments, at this stage Netflix intends to charge a flat $10 per month subscription with over one million Australians tipped to sign up to their streaming service in the first year.
The US giant told 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.”
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 minimise tax.
“We note that their ‘Australian’ emails have an address from The Netherlands,” he said.
AdNews claims that treasury 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 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”
