Will porn pay the Budget's new offshore digital GST?

PORNOGRAPHY downloads will likely be caught up in the Federal Government's proposed GST rules for offshore digital suppliers, but a Queensland tax specialist has questioned whether porn companies would bother paying.

While high-profile download service Netflix has indicated it would comply with the changes mooted for 2017, BDO's Mark Molesworth told a post-budget breakfast event in Brisbane he doubted porn sites would.

He also raised concerns about how the Australian government would collect the tax from companies abroad.

"There are many, many companies, more than just Netflix and Stan, and anyone else allowing digital downloads who will be caught by that," he said.

"If you're supplying goods it's really easy because Customs will stop the goods at the border and say to the customer 'Hey I want GST or you don't get your goods'.

"With digital downloads, say downloading movies off Netflix, there's no way for Customs to stop the download at the border.

"What the proposal attempts to do is to bring the offshore supplier into the Australian GST net.

"Netflix itself has said 'That's okay we'll comply with whatever rules Australia wants to put on us, that's fine'.

"I do have a question, however, about other companies that maybe less worried about their international taxation profile because the largest downloading of things over the internet is probably pornography.

"So I wonder about somebody sitting in the US saying 'Yes we'll pay GST to the Australian government in respect of every Australian consumer's download of our product'.

"I find that hard to believe.

"I think there's a collection issue the government hasn't quite got its head around yet."

Treasurer Joe Hockey announced the new legislation on Monday as part of a wider crackdown on multinational companies avoiding tax in Australia.

"It is plainly unfair that a supplier of digital products into Australia is not charging the GST whilst someone locally has to charge the GST," he said.

"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 ebooks from overseas."

The scheme is expected to cost $1.5 million to establish but is forecast to raise $350 million from Australian consumers over four years.

Questions put to Treasury about collection methods are yet to be answered.



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