By Simon O’ Connor, 7th July 2015
Australia plan to introduce a 10% GST levy on foreign services from July 2017. The plan which was announced in Australia’s annual budget could generate as much as AU$3.2 billion for the state.
The proposed amendments in the new Online GST include:
- Make the supply of anything other than goods or real property to an entity that is not registered or required to be registered for GST potentially subject to GST if that entity is an Australian resident
- Provide that the GST will be payable on certain electronic supplies to which the above applies, by the operator of the service through which the supply is made to the consumer rather than the actual supplier
- Allow for the making of regulations to provide simplified rules for registration, tax periods and GST returns for entities to which the proposed amendments apply.
The tax will require such companies as Google, Apple and Netflix etc. to register as foreign GST businesses, charge consumers Australian GST and submit regular filings and payments to the Australian tax office. The Australian Federal Treasury will include such digital services as E- Books, Streaming music/films/ games, online membership to clubs/ Dating Services/ Digital Newspapers and SaaS software/ Hosting services in the new tax.
At the moment any company in Australia supplying digital products must charge GST to consumers whereas currently an offshore supplier selling digital products in Australia does not. The main objective in introducing the levy is to “level the playing field” between Australian businesses and offshore businesses. When the GST legislation was originally drafted, the Australian government did not anticipate the huge growth in the supply of digital products from overseas.
This new digital levy is similar to the rules that the European Union introduced on the 1st of January 2015. Such countries such as Switzerland, Norway and Japan plan to introduce a similar levy in the near future.