Presto applauds Government move to force US streaming rival Netflix to pay GST

netflix_australia-234x107Foxtel 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. 

Hockey said even if companies comply with the laws of other jurisdictions, the ATO will be able to intervene “if there is an element that relates to behaviour in Australia”.

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


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