Government’s digital tax plan to target multinational internet giants blog image

Government’s digital tax plan to target multinational internet giants

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The federal government has plans for an interim tax that would assess overseas digital companies in the country in which they make billions in profit, but pay very little tax. Internet giants such as Google, Facebook, Uber, and Airbnb are set to be hit by this proposed interim digital tax.

Should this digital tax plan push through, Australia will be one of the world’s earliest movers in introducing an interim tax on multinational digital companies.

Digital economy is rising

Figures recently released from the October 2018 Treasury Discussion Paper show that the digital economy in Australia is rising. Between 2017 and 2018, mobile downloads rose by 41% and broadband downloads had increased to 3.8 billion gigabytes.

Furthermore, social media giant Facebook has approximately 17 million users in the country, while 15 million Australians access YouTube, and 3.7 million Uber trips were taken during only a three-month period in 2017.

These internet giants are predicted to make even larger profits as more and more Australians go online.

Expect change

At a recent speech, Treasurer Josh Frydenberg told multinational digital companies to expect change. He said, “The government remains concerned that some very profitable, highly digitised companies pay very little tax in the countries in which they do business.”

Therefore, Treasury is taking into consideration copying an EU-style of interim tax that would see digital companies with significant digital profits pay a 3% tax on social media advertising. However, this will likely be temporary as Australia pushes through negotiations with other countries who are also calling for reform. These negotiations will revolutionise the way digital businesses are taxed around the world.

The future taxation of digitalised businesses

Come 2020, Australia, like the Organisation for Economic Co-operation and Development (OECD) and nations of the G20 are to put a taxable value on products that are sold as well as user data. Another long-term proposal is to divide the profits of multi-billion dollar digital companies according to the number of users or data gathered in each country.

While these proposals are ideal for raising more money from multinationals, Treasury thinks that “a multilateral solution is likely to be several years away and there is no guarantee that international consensus will ultimately emerge”.

However, once international consensus on a longer-term solution is reached, any Australian interim measure could be transitioned.

 

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Disclaimer

Source: smh.com.au

2 responses to “Government’s digital tax plan to target multinational internet giants”

  1. Brock Rason says:

    What’s up, I would like to subscribe for this blog to get newest updates, so where can I do it please assist.

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