Foreign businesses may soon need to register for GST if they supply digital products or services to Australian consumers. The implications that the ‘Netflix tax’ (as it is more commonly called) will have on businesses and consumers alike are broad.
If the legislation is passed, consumers will be charged GST on intangible purchases from foreign businesses (consider iTunes, Amazon e-books, Netflix, Spotify and The Wall Street Journal online subscriptions). The Government expects that this will allow Australian businesses (who are already required to charge GST) to be more competitive against their foreign rivals.
Overseas businesses who supply digital products or intangible services to Australians will need to consider whether they are required to register for GST in Australia. They will also be required to take reasonable steps to determine whether or not their customer is Australian.
These changes are proposed to take effect from 1 July 2017.
If you are a foreign business who sells digital products or other intangible services to Australians and would like to find out more about how the proposed changes may affect you, please contact either Murray Howlett or Josh Meggs on (07) 3023 1300.