Australian Treasurer Joe Hockey has confirmed plans to charge a 10% tax on digital goods sold from outside the country will go ahead when he releases the new budget tomorrow. The tax will be part of the Goods and Services Tax (GST), a 10% tax applied to all purchases in Australia (which makes those purchases 10% more expensive). Hockey said he expects the tax to bring in $350 million AUD over the next four years. The new tax will apply to digital downloads purchased from overseas sellers, including video games, music, and movies.
Dubbed the “Netflix Tax” in commemoration of the recent launch of Netflix in Australia, the application of GST to digital goods has been talked about for a long time, but never implemented. The absence of the tax on digital goods up until now has made buying online things like video games much cheaper than buying them at retail, which has led to lobby groups arguing that local stores have been unfairly disadvantaged against international sellers because they have to charge 10% more for the same product. It will also level the playing field for Australian online retailers, which have also had to charge extra for the tax. Local TV and movie streaming services like Stan and Presto will now be on a level playing field with Netflix, which is based in the US.
“It is plainly unfair that a supplier of digital products in Australia has to charge GST and an off-shore supplier does not.” Hockey said, via the ABC. “What we’re doing is going to digital providers overseas and saying ‘can you apply the GST to the products you provide into Australia?’. They are agreeable to it. It’s not their profits [being taxed]. It’s a tax collected and they remit it back to the country where that occurs.
“When the GST legislation was originally drafted, it did not anticipate the massive growth in the supply of digital goods like movie downloads, games and e-books from overseas.”
It’s unlikely the tax will apply to all online sellers operating in Australia, however. Apparently, the changes will target 30 companies, and there have been no indications that the Australian Taxation Office (ATO) is equipped to make all online retailers that serve Australian customers charge for tax. So if you’re worried about Steam prices, you can rest assured. There are a myriad of online stores that resell Steam keys, and from what we know of the ATO, it’ll be a surprise if it even knows those stores exist.