Netflix won’t collect GST in Australia as debate heats up

The debate over GST reform has once again been pushed into the spotlight following confirmation online streaming service Netflix will be exempt from passing on the goods and services tax to its customers when it launches in Australia next week.

Netflix will officially launch in Australia and New Zealand on March 24, despite thousands of tech-savvy Australians already accessing the company’s American service by bypassing its geo-block.

A spokesperson for Netflix told SmartCompany the streaming service would not be collecting GST in Australia because there were no laws requiring it to do so.

“Netflix has been and will be compliant with all applicable laws and regulations, and we pay taxes as required under local and national law,” says the spokesperson.

“There are no local or federal rules requiring companies not based in Australia to collect GST on digital purchases.”

In January, the newly appointed Assistant Treasurer Josh Frydenberg signalled his interest in reviewing the goods and services tax through the upcoming tax white paper and potentially lowering the GST-free threshold for online overseas purchases.

“It is not fair to taxpayers, or to retailers or their many employees, to exempt overseas online retailers from the GST even if some consumers are enjoying the ride,” Frydenberg told SmartCompany at the time.

The comments came after retail magnate Gerry Harvey slammed Australia Post for encouraging local shoppers to avoid paying the GST by purchasing goods from US retailers and then having them forwarded to Australia via its ShopMate service.

Small Business Minister Bruce Billson told SmartCompany this morninghe encourages Australian businesses to “have their voice heard” if they are unhappy about overseas companies having a competitive edge by not passing on the cost of the GST to consumers.

“My goal is to make sure there is tax equity and tax efficiency across the economy and as far as possible get businesses small and big on a level playing field,” Billson says.

“I encourage small business to have their voice heard in shaping the kind of tax system that supports out shared goals for our country.”

However, Murray Hurps, the general manager of startup co-working space Fishburners, told SmartCompany he is always cynical when a politician says they want to take on international tech giants.

In his view, politicians should be focusing on creating a thriving local small business community and if they are to crack down on international companies they should also turn their sights to big mining and insurance firms.

“It seems the government needs some money and they’re looking at ways of getting that and see this as untapped revenue,” he says.

“I would say the much bigger opportunity would be bold and creating the next industry that can bring jobs and revenue into Australia… and all the other good things startups can bring. If they can seize on the opportunity there I don’t think anyone’s going to care about the GST Netflix could be paying.”

Earlier this week Communications Minister Malcolm Turnbull told SmartCompany he is considering a proposal where Google and Facebook pay the GST on their Australian advertising revenue as a way to fight back against “the erosion of our tax bases”.