(Australian Associated Press)
Australia will not create its own digital services tax while it waits for the global community to decide on the best way to handle the revenue of online giants such as Google, Amazon and Facebook.
The United Kingdom and France are among countries to have unveiled plans in the past six months to tax the revenues of the biggest internet-based companies.
But Treasurer Josh Frydenberg has revealed the Australian government will not follow in their footsteps, instead waiting for an international consensus on taxing the online economy.
The government expects the consensus will come through global forums such as the Organisation for Economic Co-operation and Development and G20.
The OECD is due to host a discussion on the issue in May and release a final report in 2020.
The decision comes after the Australian government released a discussion paper in October seeking views on whether it should tackle the issue on its own, until a global consensus is reached.
Stakeholders were concerned the fresh Australian tax could stifle innovation and competition, adversely affect start-ups and low-margin businesses, and mean some people would be taxed twice.
“Given this feedback and recent international developments, the government has decided to continue to focus our efforts on engaging in a multilateral process,” Mr Frydenberg said in a statement on Wednesday.
In its submission, the Business Council of Australia urged the government to work through the OECD and avoid an ad hoc, unilateral response.
“Global tax issues require global solutions,” the submission said.
The announcement comes exactly a year after then-treasurer Scott Morrison urged his G20 counterparts to work together to ensure online giants are properly taxed.
Without such collaboration, the tax system will be “clunky”, “clumsy” and won’t be well targeted, potentially missing out on the potential growth of the new economy, he said.
“The idea the new economy should be a tax-free environment I think is a nonsense. It can’t be a tax-free club,” the now-prime minister told Bloomberg on the sidelines of the conference.
Britain said in October it would tax the profitable online companies from April 2020 at two per cent for the money they make from UK users.
France committed earlier this month to slapping a digital tax of three per cent on companies earning more than 750 million euros ($A1.2 billion), including French revenue over 25 million euros ($A40 million).
The French decision came after a similar proposal at the European Union level failed to get unanimous support from member states.
New Zealand has also sets its sights on its own digital tax, with Prime Minister Jacinda Ardern announcing last month her government would release a consultation document in May before finalising its policy.