Introducing the amazing Australian “Netflix tax”

[Commentary] Earlier in April, Australian Federal Treasurer Joe Hockey announced that he will introduce legislation subjecting overseas sellers of downloaded movies, music, books and other media to the obligation to collect and pay Goods and Services Tax (GST) to the Australian government for downloads destined for Australia. Treasurer Hockey claimed the move would level the playing field, be easy to administer and raise billions in additional revenue. The move appears to have been prompted by the recent arrival of Netflix down-under, which is conveniently incorporated and selling its services from a non-Australian jurisdiction. As such, Netflix is not (at the moment at least) subject to the 10 percent GST on its subscriptions in the same manner as locally-incorporated streaming services are. Colloquially, this has now been dubbed the “Netflix Tax.” Solving historical tax jurisdiction issues and technical questions about attribution all at once sounds pretty amazing, doesn’t it? Unfortunately, neither seems to be true, as neither of these dilemmas appears to be solved by Treasurer Hockey’s legislative proposals.

[Bronwyn Howell is general manager for the New Zealand Institute for the Study of Competition and Regulation]