Netflix, the giant US media streaming service opening in Australia next week, won’t be charging GST on its services because its not a local company.
This will give Netflix a 10% price advantage over local players such as Stan, the $100 million Fairfax Media and Nine Entertainment joint venture, Quickflix, Presto and EzyFlix.tv.
All are vying for a piece of the growing Australian online media streaming business.
Those with all-you-can-watch services are charging about $9.99 a month.
Netflix, due to launch March 24, hasn’t announced what it will charge yet.
However, the Australian dollar has weakened since Netflix announced it was moving into Australia. This means that the Australian dollars it earns will convert to fewer US dollars.
A Netflix spokesman told Business Insider: “Netflix has been and will be compliant with all applicable laws and regulations, and we pay taxes as required under local and national law. There are no local or federal rules requiring companies not based in Australia to collect GST on digital purchases.”
Stan has no comment, but Quickflix CEO Stephen Langsford said: “When it comes to tax most Australians would expect Netflix to pay their fair share.”
Netflix is in the same legal area as online retailers based outside Australia. They are not local entities, have no legal presence in Australia and so therefore are not liable to Australian laws and cannot be made to pay GST
The federal government has been looking at the tax liabilities, and payments, of multinational companies operating in Australia.
Australia is “absolutely determined to ensure that companies that earn their profits in Australia pay tax to the Australian government”, says Treasurer Joe Hockey.
The issue is expected to be covered in the tax white paper due to be released next month.
Business Insider Emails & Alerts
Site highlights each day to your inbox.