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Taskforce focus on e-commerce and digital economy industry

Outlines the Taskforce work completed around e-commerce and digital economy focus areas.

Last updated 11 April 2024


As part of the work undertaken by the Tax Avoidance Taskforce, we have done substantial compliance work focusing on the e-commerce and digital economy industry.

Multinational enterprises (MNEs) operating in this industry have significantly increased the profits declared and the tax they pay in Australia as result of our efforts.

Of the various business models adopted in this industry sector, our compliance approach extended to IT/digital economy sub-industries, including:

  • IT hardware and software
  • IT consulting/technical services
  • online advertising
  • online retailing
  • payment processing
  • cloud and data hosting services
  • digital platforms – online marketplaces, online gambling/gaming and the sharing economy.

The evolving nature of this industry has transformed the way MNEs conduct their operations, resulting in new business models. This has created a unique set of challenges for us to address, and we are proud of our achievements.

Key achievements

At 30 June 2018, some of the key achievements include:

  • over $1 billion in cash collections
  • future revenue effects of more than $580 million over the next four years
  • the completion of many complex audits on industry leading e-commerce MNEs.

Key technical issues

Our active compliance efforts across the e-commerce and digital economy industry focused on examining several key technical issues to achieve forward and past compliance. These included, but were not limited to:

  • Transfer pricing – we have undertaken extensive compliance activities in determining the arm’s length conditions that operate for Australian subsidiaries of e-commerce MNEs with inbound supply chains.
  • Permanent establishments (PE) – as well as using the transfer pricing rules to arrive at the arm’s length outcome, in some major audits we applied the PE rules under the relevant double tax agreement. The work done in these audits introduced new laws to combat structures designed to avoid a taxable presence in Australia. The Multinational Anti-Avoidance Law (MAAL) has since eased concerns associated with these structures with many e-commerce taxpayers restructuring into MAAL compliant buy/sell arrangements.
  • Royalty withholding tax – in light of the emergence of software distribution models involving the provision of digital products and services, we considered the characterisation of payments made by Australian software distributors to offshore licensors and the royalty withholding tax implications.
  • General anti-avoidance laws – prior to the introduction of the MAAL, we considered the application of Part IVA to arrangements where Australian customer revenue was derived by a non-resident.
  • Goods and services tax (GST) amendments – recent law changes have had an impact on the taxation of cross-border e-commerce under the GST regime. From 1 July 2017, GST was extended to cross-border supplies of digital products and other services imported by Australian consumers to create a level playing field for domestic suppliers with their offshore counterparts.