Australia’s Treasurer on February 10 introduced into Parliament a bill that would impose the 10 percent goods and services tax (GST) to all supplies by nonresidents to Australian consumers except for supplies of goods and real property. A second measure in the bill removes some non-resident business-to-business suppliers from the GST system.
The bill follows up on announcements made in the government’s 2015–16 budget and consultations on two exposure drafts launched last year.
Under the bill, supplies to Australian consumers of digital products, such as streaming or downloading of movies, music, apps, games and e-books would be subject to the GST whether they are supplied by a local or foreign supplier.
Similarly, suppliers of services to Australian consumers, including consultancy and professional services, would be required to register, collect, and remit GST. The obligation to register for GST will only arise if the non-resident’s GST turnover exceeds a threshold of AUD 75,000. A streamlined non-resident GST registration process is provided.
The bill, which is effective July 1, 2017, also allows responsibility for GST liability to be shifted from the supplier to the operator of an electronic distribution platform.
“This bill is an important part of the government’s program to level the playing field for Australian businesses and restore integrity to Australia’s tax system,” Treasurer Scott Morrison said when introducing the bill to Parliament.
Morrison said the rules were consistent with the final report under action 1 of the OECD/G20 base erosion profit shifting plan, and are similar to rules adopted or about to be adopted in the EU, Japan, and New Zealand.
Other provisions in the bill relieve the obligation of non-resident suppliers to account for GST on certain business-to-business supplies. Included are amendments that would modify the test for when an enterprise is carried on in Australia so it more closely aligns with Australian treaty practice in relation to permanent establishments.
Other changes limit the connected with Australia test where supplies are made between businesses. Others provide that non-resident suppliers that only make GST-free supplies do not need to register.
See:
Related MNE Tax articles:
Be the first to comment