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Advertisers set to pay levy on digital advertising in government tax bombshell

Advertisers set to pay levy on digital advertising in government tax bombshell

Originally posted by Paul Wallbank @ mumbrella.com.au

Australian brands look set to face a tax on digital advertising in a new policy emerging from the treasury this morning.

Briefings to both Fairfax Media and News Corp titles suggest that the Government plans to impose a “digital levy”. The SMH reports Treasurer Scott Morrison as saying that such a levy – targeting global digital giants is “inevitable”.

The arrangement is part of a deal to persuade crossbenchers to support the government’s tax law reforms.

The Australian reports the former the Nick Xenophon Team Senators, Stirling Griff and Rex Patrick have said a levy on international technology companies may get their support for the government’s proposed $35 bn company tax cut.

Fairfax, in turn, reports Griff stated the party was “100 per cent behind a digital economy tax proposal”. The Labor Party has previously said it has no objection to such a levy.

According to the SMH report the levy “would look more like a sales tax through a GST-style levy paid on advertising. It would be up to the digital company to decide whether that levy was passed on to the advertiser”.

In March, the EU proposed a tax on digital technology companies with over 100,000 users in a country or over 7 million euros ($8.6 million) in annual revenues. While the actual rate has not been agreed, a rate of 3 percent would generate an extra $5 billion per year across the union.

Should a similar tax to the EU proposal be levied in Australia, such a tax may catch News Corp in its net given its global ownership and reliance upon digital advertising. It is also likely to catch many of the multinational programmatic advertising platforms. Mumbrella has invited News Corp to comment.

The Treasurer’s announcement also comes at the ACCC’s digital platforms review gears up. The inquiry itself was another concession tocross bench Senators in order to pass the government’s media reforms.

A digital platforms levy would almost certainly be effectively a tax on digital advertising given the dominance of Facebook and Google in the market. As such it would be the first advertising tax in Australian history.

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