Netflix made hundreds of millions of dollars from Australian customers in 2021. But the tax bill was small compared to the income.
Netflix paid less than $1 million in taxes in 2021, despite earning hundreds of millions of dollars from Australian customers.
According to filings with the Australian Securities & Investments Commission (ASIC), as revealed by The Sydney Morning Herald, Netflix’s local tax bill was $868,000. It reported a profit of $1.5 million from revenue of $30.7 million, which was related to back-end activities such as payment processing.
The real driving force of Netflix’s revenue – revenue from customer subscriptions – was not subject to Australian taxes because local subscribers were billed through a Netherlands-based entity.
The Netherlands is a low-tax jurisdiction and Netflix’s accounting operations are legal. SMH said Netflix intended to bill Australian customers through Australia from January 2022.
While Netflix doesn’t disclose region-specific subscriber numbers outside of North America, industry analyst Telsyte estimated that Netflix has six million members in Australia.
With the cheapest Australian plan at $10.99 per month and a top rate of $22.99 per month, six million accounts would translate into revenue between $791 million and $1.65 billion.
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Netflix has ramped up its local commissions since its first Australian title, the widespread supernatural drama Tide countriesstarring Elsa Pataky, in May 2017.
The streamer has since released controversial reality series Byron Baeswhich sparked the ire of locals over the fear of how the popular holiday town would be portrayed, Chris Lilley’s insaneanimated feature Back to the interior and documentary Puff Pastry: Wonders of the Reef.
It’s in the making Heartache high reboot, the drama starring Celeste Barber wellmania and Jessica Watson biopic True Spirit†
Australia also hosted a series of Netflix titles that were co-produced with the US.
There was the thriller series clickbaitwhich was filmed in Melbourne but featured an American story and an American lead.
Upcoming is the Elsa Pataky-led action feature interceptordirected by Australian writer Matthew Reilly who adapted his own book, although it is understood interceptor was commissioned by the US team.
Melissa McCarthy Series God’s Favorite Idiot filmed early episodes in northern NSW before production wrapped unexpectedly early. The remaining episodes are expected to be filmed in the US at a later date.
Netflix and other international streamers, including Amazon Prime Video and Disney+, have actively invested in Australian productions while trying to ward off government intervention in the market.
Local production interests and performers are calling for a mandatory quota so that international entertainment companies would have to invest a certain percentage of their revenues into making Australian TV and movies.
Globally, Netflix has had tumultuous months with its stock price tumbles 70 percent since the beginning of the year, wiping out tens of billions of dollars of its value.
The company revealed in April that it has a net loss of 200,000 subscribers in the first three months of the year and is expected to lose another 2.5 million in the current quarter. The news led to a sell-off of its shares as investors worried about the company’s long-term growth trajectory.
As a result, Netflix executives have pledged to make drastic changes to its business model.
Netflix said it would introduce a cheaper, ad-supported subscription tier by the end of the year and tackle password sharing.
It has also started cost cutting, including the firing of the head of the animation department, as well as several staffers and projects, including the Meghan Markle series. Pearl†
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