Australia's tax office reclassifies cloud and streaming revenue as royalties, targeting Big Tech
The Australian Taxation Office ruled that cloud computing and streaming income will be taxed as royalties, potentially adding billions in taxes for firms such as Amazon, Google and Netflix.
After five years of consultation, the Australian Taxation Office issued a decision classifying income from cloud computing and streaming services as royalties, which will be taxed at a higher rate. The change targets major technology firms—including Amazon, Google and Netflix—and could generate billions of extra tax revenue for the government. It follows a series of recent Australian measures, such as the digital duty of care laws and a 2.5 % levy on tech advertising revenue, as well as a $1 billion fine for Netflix over local content quotas.
U.S. trade bodies have labeled the proposal “gross overreach” and warned it could spark treaty disputes, but the White House has so far responded only with rhetoric. Prime Minister Albanese reiterated that Australia will act in its national interest, while the High Court’s earlier ruling on a royalty case involving PepsiCo and Schweppes was deemed limited in scope by the ATO. Law firm MinterEllison noted the new ruling expands the tax office’s approach, and the agency signaled readiness to defend it in court.
