Australia Digital GST liabilities are to become a reality for international digital service suppliers in less than 100 days.
On July 1, 2017, Australia’s Goods and Services Tax (GST) will – as outlined here new law — be extended to the cross-border supplies of digital services bought by Australian consumers. These supplies include digital services (e.g. the streaming, or downloading, of movies, music, apps, games, e-books) in addition to services such as architectural or legal services.
Australia’s new digital GST has moved a step closer as one of the last acts of Malcolm Turnbull’s government was the passing of the digital goods and services tax (GST) bill.
On Wednesday, May 4, the Tax and Superannuation Laws Amendment (2016 Measures No. 1) Bill 2016 finally passed both houses of the Australian Parliament. Four days later Turnbull’s government was dissolved and an election called for July 2.
Digital tax trends indicate a move to destination-based taxation. We like to keep those affected up-to-date so here’s a list of countries planning such changes.
The common thread in international digital tax trends is the move from a supplier-based taxation to one based on the consumer’s location, or destination-based taxation.
The Organisation for Economic Co-Operation and Development (OECD) has already approved the destination-based principle in Action 1 of the October 2015 release of their Base Erosion and Profit Shifting (BEPS) report.
Australia could recoup as much as AU$3.2 billion from a new 10% digital services GST revealed in the 2015 budget.
Draft laws for the new Australian digital services GST were introduced to the Australian Parliament on February 10, 2016. Treasurer Scott Morrison told The Australian Parliament why he was introducing such rules:
It ensures Australian businesses selling digital products and services are not disadvantaged relative to overseas businesses that sell equivalent products in Australia.
There have been some major digital tax developments in the Asia-Pacific region this month. In early February 2016 Ernst & Young urged the Singapore Government to introduce a new tax on international digital service suppliers in the island city-state’s 2016 Budget. Photo: Pixabay
The Asia-Pacific region, in general, has been very active in the realm of digital taxation.
In October 2015 Japan amended their consumption tax laws. Now, all foreign businesses supplying digital services to Japanese consumers must collect and remit an 8% consumption tax to the Japanese tax authorities.