Australia is introducing new rules for GST on supplies of e-services made to Australian consumers, i.e. B2C supplies. The Australian government recently issued an exposure draft Bill (ED) and associated explanatory material to amend GST law on which it is inviting comments until 7 July 2015. The planned implementation date is 1 July 2017.
The changes are similar to the EU B2C VAT rule changes that were introduced on 1 January 2015 for Broadcasting, Telecommunications and e-services (BTE) and are in line with OECD guidelines. The intention is to create a level playing field in the provision of digital products and services to Australian consumers whether they are provided by an Australian supplier or an overseas supplier. The definition of an “Australian consumer” includes an Australian resident other than a business as well as a trader that is not registered or required to be registered for GST because it falls below the GST registration threshold.
The Australian Tax Office (ATO) can expect to encounter issues similar to those experienced on the EU’s implementation of its VAT B2C rules on BTE services. One of the main problem areas is likely to be deciding what evidence will be required by suppliers to determine whether a customer is an Australian consumer. This is a point that businesses providing the relevant services will want certainty on. The ATO have also indicated that a simplified registration process will be introduced for overseas service providers to ease the administrative burden of complying with the new rules. Where services are provided via an electronic distribution service and the operator controls key factors such as delivery, pricing or T&Cs, then it is proposed that responsibility for any GST liability will shift from the supplier to the operator of the distribution platform.
One interesting point included in the explanatory material is that the proposed changes are intended to apply to services such as consultancy and professional services as well as to digital services, such as streaming or downloading of films, music, games, e-books and apps. So whilst the new rules appear to be similar to the recent EU VAT changes, there could be some key differences between the two.
If your business is involved in supplying these services internationally you need to keep an eye on developments in Australia.