DevelopmentsManagementTourism

Fair or flawed? Multinationals hit with new tax rules

A new law forcing multinational online travel agents to comply with Australian GST rules has come into effect – but is unlikely to catch the biggest fish in its net.

Offshore sellers of Australian commercial accom must now pay GST when sales exceed $75,000 in a year, and businesses which book rooms through those sellers will now be issued a tax invoice and can claim GST credits.

The Australian Tax Office says the reforms, passed by parliament in September, represent a ‘levelling of the playing field’ as international OTAs providing merchant services join local operators in being required to register for and remit the GST on Australian sales.

“This change removes the competitive advantage that offshore sellers had over domestic accommodation providers,” said deputy commissioner Deborah Jenkins.

However, agents which organise stays on behalf of Australian providers and then invoice them later still won’t be required to collect and remit GST on those bookings.

Booking.com has always predominantly operated under this ‘agency model’, and Expedia is predicted to transition the same way Down Under, away from the traditional ‘merchant model’ through which it buys discounted accommodation in bulk directly from operators and up-sells it.

Tourism Accommodation Australia CEO Michael Johnson welcomed the change, saying it had followed extensive lobbying by the association.

“We have been pushing for some time to have this loophole closed and to see global offshore booking giants pay their fair share of tax,” he said.

“It takes away some of the competitive advantage the large offshore sellers have had over Australian-based accommodation providers for some time.”

But Johnson also said he remained concerned about the terms multinational travel giants impose on Australian operators over deals and pricing.

“To put it simply, many of our members remain reliant on these huge offshore sellers as many people use them to book their hotel accommodation,” he said.

“We would like to see a lot more done when it comes to special deals and pricing on these websites and we will be pushing for that in coming months.”

The law, passed without amendment, follows last year’s GST crackdown on global digital service providers and marketplace retailers such as Amazon and eBay.

Accommodation Association chief executive Dean Long said of the OTA change: “This new law only applies when offshore travel agents act as principals (not agents).

“As a result, it becomes extremely important that accommodation providers understand the agreements they are signing with OTAs and the implications for GST.”

Tags

Kate Jackson

Kate Jackson is the editor of Accomnews. You can reach her at any time with questions or submissions: [email protected]

Related Articles

Leave a Reply

Your email address will not be published. Required fields are marked *

Check Also

Close
Back to top button
Close
Close