ByMark J. Guillen, writer at
With the imposition of new goods and services tax, the streaming giant will no longer be able to enjoy good pricing than its competitors in Australia.

Netflix Inc. and other non-Australian companies will be asked by the Australian government to collect goods and services tax of 10% from their subscribers in the region. Next week in Federal Budget, the details of goods and services tax (GST) will be mentioned.

On Thursday, Fairfax Financial Holdings Ltd. reported, the federal government of Australia is looking to charge approximately 10% GST on imperceptible services like music, movies, and books etc., which are available on the internet or on website of companies outside such as Netflix.

The goods and services tax is already implemented on different digital services like Presto, Stan and Quickflix and several of them have critiqued Netflix of not paying any tax. Netflix already charges around $8.99 a month in Australia for its online services, cheaper compared to its competitors in the country. However, the amount is most likely to rise due to 10% GST imposed on the company.

Related to this, Josh Frydenberg, treasurer of the country claimed that development like this is intended to provide companies, regardless of their origin, a same level of opportunity to flourish in the country. Furthermore, since Australia is seeing a rise in its e-commerce and digital segment, the tax system was needed to get adjusted according to the situation, said Frydenberg.

The implementation of GST is not going to accompany a cut in the upper limit of 1000 Australian dollar on imported goods, which are GST exempted. There is news that Mr. Fryderberg will refer other treasurer of state to decrease the limit anytime later. Some are projecting the exemption to go down to $500; however, Fryderberg is looking to reduce it even more. England has imported products threshold limit of 15 pounds, though Canada has $20 maximum limit.

Expenditure Review Committee of Australia claimed that alteration in goods and services tax will require a little bit of revision of Tax Act, but will not be that difficult to implement. In addition, a redrafting by former premiers John Brumby and Nick Greiner in 2012 specified that the country loses almost $1 billion each year because of GST non-collection related to non-tangible assets.

However, the Australian government is planning to increase taxes on online products, but still it hasn’t done anything to push multinational players like Apple, Google to announce earnings in the region. Apparently, the government has dropped plans to impose tax on these companies.

Netflix stock was up 0.84% to $565.24 at market close on Thursday.


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