Submission to The Treasury on the Digital Economy and Australia’s Corporate Tax System

IGEA has made a submission to The Treasury on its consultation on the digital economy and Australia’s corporate tax system.

IGEA’s submission made the following arguments:

• No sufficient case has been made for undertaking interim tax measures, noting that “scale without mass” is not unique to some digital businesses but is a trait of many businesses across traditional industries
• Unilateral interim measures will be complex and problematic, with risks ranging from double-taxation and significant compliance costs to impacts on investment and consumers
• Reform of the international tax system through multi-lateral arrangements is the only genuinely workable path ahead for Australia
• Digital game content are not purely digital goods, are economically-valuable products that do not rely on user-created value, are already subject to a range of tax integrity rules, and already attract Australian GST
• Digital game storefronts are not intermediation services but are often simply digital extensions of physical game stores, with the added difference that they also invest heavily into developing and selling their own hardware and software
• There are significant, practical considerations around the taxation of online advertising and user contributions and impact on Australian start-ups that would need to be resolved before any interim measures can be introduced

On 20 March 2019, the Treasurer announced that, following the consultation process, the Government has decided to continue to focus on engaging in a multilateral process and would not proceed with any interim measures.