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Australia reviews GST on B2C digital goods & services

  • Apr 14, 2015 | Richard Asquith

Australia reviews GST on B2C digital goods & services

Australia is considering closing the tax loophole for foreign providers of digitals goods & services to consumers. At present, foreign located providers of streaming games, music, apps, films, e-books, e-journals, internet services etc. do not have to charge Australian GST at 10%. This gives them an unfair advantage over Australia-based providers.

Last week, the Australian Treasury, Joe Hockey, conceded that this gap needed addressing as the market has expanded hugely, and the tax law is out of date. In particular, there is concern that digital multinationals such as Google, Amazon, Alibaba Netflix and Apple have Australian operations by have been channeling digital sales through their foreign entities – thus avoiding the requirement to charge 10% GST.

The review of foreign digital B2C services will come as part of a wider rethink of the Australian tax system. This includes a discussion on raising GST from 10% - which is well below the regional average - to fund cuts to corporate income taxes and labour taxes which undermine economic growth. There may also be an introduction of a bank levy or similar financial transaction tax.

EU 2015 digital VAT changes

At the start 2015, the European Union changed its rules on VAT on B2C digital and electronic services to consumers. From January, EU-based providers had to switch to charging the VAT rate of their country to charging that of where their customer is located. This obliges them to track the location of residence of their consumers.

VP Global Indirect Tax
Richard Asquith
VP Global Indirect Tax Richard Asquith
Richard Asquith is the former VP Global Indirect Tax at Avalara