Presto applauds Government move to force US streaming rival Netflix to pay GST
Foxtel streaming service Presto has welcomed the Government’s plan to force US rival Netflix to pay Goods and Services tax (GST) after insisting it was “critical” all players operate by the same rules.
Treasurer Joe Hockey yesterday confirmed draft legislation for the so-called “Netflix tax” will be released in tonight’s budget, although it is unlikely to take effect for several months.
Netflix said there was “still a distance to go” before any proposed taxes would be introduced and declined to comment on “something that hasn’t been confirmed yet”.
A spokesman added: “Netflix has been and will be compliant with all applicable laws and regulations, and pay taxes as required under local and national law.”
In a separate but related move, Hockey flagged the Australian Tax Office will be handed greater powers to recover money from multinational companies who avoid tax obligations through intricate and convoluted tax structures.
Google, Microsoft and Apple are among several firms who have come under fire with company bosses grilled by Senators during an inquiry into the issue last month.
The legislation would strengthen section 4A of the Income Tax Act, an existing section of the Act designed to prevent accounting systems designed to avoid the payment of tax.
Foxtel, which operates Presto in collaboration with Seven West Media, said the move to enforce GST for the supply of digital content services “is the right one”.
“The digital marketplace is an increasingly competitive space and it’s critical to ensure that all players that do business in Australia do so on a level field, with no one player advantaged through tax loopholes,” Foxtel group director of corporate affairs Bruce Meagher said.
“The introduction of this legislation will not only help to maintain consistency across the competitive landscape, but it will also ensure that Australia gets its due taxes from the companies that choose to do business here, which benefits all Australians.”
Hockey, who hinted at the move to clamp down on Netflix last month, said yesterday the legislation will “level the playing field for the GST” and would raise $350m over four years.
“It is plainly unfair that a supplier of digital products into Australia is not charging the GST whilst someone locally has to charge the GST,” Hockey said. “When the GST legislation was originally drafted, it did not anticipate the massive growth in the supply of digital goods like movie downloads, games and eBooks from overseas.”
The Netflix debate riled News Corp Australia chief executive Julian Clarke at the tax inquiry who claimed its US rival has an unfair advantage at not having to pay GST.
“Netflix have just come into this country. They have been able to price themselves below the company that we have, which is Presto. But it’s not just us – it’s also the Fairfax joint venture with Nine (Stan),” Clarke said.
“We would be looking to Parliament to fix that problem,” said Clarke. “If the GST isn’t applied here and it allows a foreign company to come here and have a lower operating cost base then clearly it’s not a level playing field.”
Steve Jones
Hey Presto, now its a level playing field (lol), how about you bring HD and Stereo sound to your offering?
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Sure, let’s level the playing field. Once the price of admission to selling direct to Australia from overseas is the collection of a little bit of tax see if more foreign companies won’t cannibalise local businesses (e.g. those here will move offshore to take advantage of labour cost efficiencies).
They’re fiddling while Rome burns around them.
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Rupert.
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For years Foxtel have had consumers over a barrel and have done nothing to make pay TV an easier, cheaper or a better experience. It only launched Presto in response to Netflix’s arrival…why did it take so long? Because it was milking us for every cent until competitive forces finally forced its hand. What a massively cynical business, in the image of the man/men behind it. I will never sign up.
I hope Netflix wipe the floor with these bloated incumbents (and pay their dues along the way, of course).
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You know your business is f**ked when you’re cheering at your competitor having to charge $1 more.
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My prediction. Quickflix to go within 1-2 years, with Presto following soon after. Stan will constantly struggle while Netflix will continue to absolutely dominate. Ive got my fingers crossed that this finally damages Foxtel – its been a monopoly for too long and Aussies are over it.
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Gotta love how in touch this government is. For more than a year people have been complaining about the “Australia tax” where digital content here is more expensive than overseas. So what does the government do? They make it even more expensive!
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Sorry Presto and Stan but Netflix isn’t even on the same playing field, while you guys were arguing over who gets to bat first Netflix has taken the rest of us to the pub for celebratory drinks.
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