Netflix Tax – Gst

Netflix Inc. is an American multinational entertainment company founded in 1997, in California by Reed Hastings and Marc Randolph. It specializes in streaming media and video on demand online and now has 86 million subscribers world-wide. In 2013, Netflix added film and television production, as well as online distribution debuting its first series, House of Cards. Since then it has greatly expanded the production of both film and television series and is investing over $6 billion in 2016 to release an estimated 126 original series or films.

Netflix launched into Australia in March 2015 and has grown to 1,878,000 subscribers at June 2016. At the standard monthly subscription rate of $10 per month Australians are paying over $225 million annually to the $40 billion US company. Currently no GST or Australian tax is paid on this $225 million revenue leaving the country.

Due to the community uproar with this unpalatable situation, Australia introduced the ‘Netflix Tax’ (which will apply from 1st July 2017). This tax applies Australian Goods and Services Tax (GST) to international sales of digital products and services provided to Australian consumers. Examples of digital products include downloaded movies, games and electronic books. Examples of services include architectural, legal or educational services. The new law applies very broadly to sales of anything except non-digital goods or real property.