Big Tech Faces Higher Tax in Australia if Deals with Local Publishers Aren't Reached

Tech giants operating in Australia could soon face a mandatory 2.5% tax on their digital advertising revenue if they fail to strike agreements with local media companies. This measure is part of the government's revised News Bargaining Incentive draft legislation, aimed at ensuring fair compensation for news producers.

The government has concluded its consultation on the legislation and plans to introduce it to parliament soon. The proposed tax rate marks an increase from the initial 2.25% outlined in the earlier draft. Additionally, the incentive for companies striking deals with smaller publishers will be enhanced, increasing from 170% to 200%.

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We don't want to discourage those large tech companies from having a growing footprint in Australia. What we do want though is that part of their business which is using news to be fairly compensating the producers of that news.

Notably, artificial intelligence companies will be exempt from this legislation. Assistant Treasurer Daniel Mulino clarified that the tax targets the portion of big tech businesses that utilize news content, rather than their entire revenue stream. This approach aims to encourage the growth of tech companies in Australia while ensuring that the news content they leverage is fairly compensated.

The legislation seeks to address the imbalance in bargaining power between large technology platforms and local media organizations. By imposing a tax on digital advertising revenue for non-compliant companies, the government intends to create a more equitable environment for the news industry.

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Any price that can't be explained will face serious scrutiny from the ACCC. Servos and suppliers are on notice. The regulator will be watching them like a hawk.