Government targets online ad dollars with tax

James McGrath
By James McGrath | 16 March 2015

Malcolm Turnbull has signalled a move for the Government to start charging GST on online advertising, a move aimed at internet giants Facebook and Google which are broadly seen as paying far less in tax than many believe they are liable for.

Speaking to media, the communcations minister said he would move for the tax to be imposed on the internet giants because of growing unease about how little tax the multinationals pay in Australia.

“The Australian media industry is under enormous pressure from online platforms, notably Facebook and Google,” Turnbull said.

“The modest amounts of company tax both companies pay in Australia has been a matter of great concern, here as well as in other countries, and there is a global discussion going on about how these internet age companies should be taxed in a matter that delivers a fair return to the countries where they make most of their money.”

He said the Australian Government could charge GST as a unilateral move, bypassing any concerns about changing tax arrangements contravening international agreements on taxation.

He blasted the international community for moving slowly on a harmonised approach to taxing multinational companies.

The changes are being considered as part of a tax review the government is undertaking. While any legislative change is still a while off, Turnbull said it was time to have a “frank and informed discussion” on how to tax companies such as Facebook and Google.

Some estimates have the GST move raising $240 million, roughly 10% of the revenue online and search engine advertising raises in Australia.

Google and Facebook are quiet on the proposals and no party is commenting on the possibility of being charged GST on advertising sales at this stage. Several players are thought to be digesting the implications before going public with their concerns.

It is also thought that the potentially affected parties have not yet sat down the minister to gauge how serious he is about the plans, or how it would affect their revenue.

In December, Michael West, business columnist at The Sydney Morning Herald wrote a column on big tech and big tax avoidance discussing the issue. Read it here: 

 

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