I was shocked that we were being taxed here. It increases the cost of the expansion by10 and 15 dollars after tax and currency conversion respectively. At first I thought we were being dumped in with the EURO VAT. After some digging I found the following:
In order to maintain the integrity of the tax system and offer a level playing field for domestic suppliers, the Government announced in the 2015–16 Budget that it would extend GST to offshore intangible supplies to Australian consumers with effect from 1 July 2017. The measure is estimated to generate a revenue gain of $350.0 million over the forward estimates period.3
The key features of the ‘Netflix tax’ are as follows:
it will be imposed on intangible supplies such as supplies of digital content, games and software—but will also extend to consultancy and professional services performed offshore for customers in Australia
the liability for the GST will rest either with the supplier or with the operator of an electronic distribution service
GST will be imposed at a rate of 10 per cent on the value of the supply
at this stage it would appear that all intangible supplies will be caught, regardless of the value of the supply (currently goods valued of less than $1,000 from overseas suppliers over the internet imported by Australian consumers are not covered under the GST Act, hence it is likely there might be scope for this value of intangible supplies to be changed by regulation) and
only supplies made to consumers will be caught: business-to-business transactions will be exempt.4
Soon after the announcement of this budget measure, the government released an exposure draft Bill titled ‘Tax Laws Amendment (Tax Integrity: GST and Digital Products) Bill 2015’. Schedule 1 item 1 of this Bill would extend the scope of the GST to offshore supplies of services and intangibles to Australian consumers from 1 July 2017.5
The proposed Bill would also amend section 9-25 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act)6 in order to make supply of goods and services connected with the indirect tax zone (broadly, supplies made or done in Australia or made to Australia, excluding those geographic areas where the GST does not apply–principally the external territories) taxable supply for GST purposes, unless the supply is GST free or input taxed (section 9-5 of the GST Act).7
The proposed amendments would permit the making of regulations to provide for a modified GST registration and remittance scheme. If a foreign supplier of digital services has established an Australian operator (for example, iiNet/Netflix for the Netflix global company) of an electronic distribution service, the operator will be registered for GST purposes. However, entities will also be able to elect to have limited registration for GST. They will not then be able to access input tax credits. An industry-wide consultation will follow to determine the scope of these rules.8
Responsibility for GST liability may be shifted from the supplier to the operator. This would happen in certain circumstances where the operator controls any of the key elements of the supply such as delivery, charging or terms and conditions. Shifting responsibility for GST liability to operators is aimed at minimising compliance costs. It is expected that operators are generally better placed to comply and ensure that digital goods and services sourced in a similar manner are taxed in a similar way.9
My only question here is since the expansion is under $1000 Australian should we be paying taxes at all? Should these taxes be calculated in USD or Australian dollars?
You can see ArenaNet aren’t lying when they say they are following tax laws, but it seems a gray area about whether they should be charging Australians or not.