After more than a month of competition, the 20 teams competing for glory in the Rugby World Cup 2015 have been reduced to just 2. The final will be a match-up between New Zealand and Australia on October 30 at London’s Olympic Park.
Australia and New Zealand have more in common than being powerhouse rugby nations. Both countries have a straight-forward seeming value added tax system (called a Goods and Services Tax in both countries) with a single rate (15% in New Zealand, 10% in Australia) for items that are not exempt or zero-rated.
Furthermore, both countries are considering implementing what has come to be known as “the Netflix Tax”. Under a Netflix Tax, as proposed in the 2015-2016 budget in Australia, the GST would “be extended to the cross-border supply of digital products and services imported by consumers.” If implemented it would be based on customer location, and effective as of 1 July 2017. Such measures seek not only to raise revenues, but to put local businesses that must pay GST on similar supplies on an equal footing with foreign sellers that do not. A similar measure has been proposed in New Zealand.
VAT on digital services based upon customer location have been in place in the European Union since 1 January 2015. Norway, South Korea and South Africa have similar VAT regimes for digital services..
So when Rugby World Cup 2019 comes around, Australians and New Zealanders will likely be subject to a “Netflix Tax”. In 2019 the Rugby World Cup will be held in Japan, coincidentally the most recent country to have implemented a Netflix Tax, effective 1 October 2015.
For a general discussion of the principles underlying taxation of online services, please listen to this podcast from Legal Currents.