Costs of digital media to rise?
In a stark warning to Australia, Google has announced that they will be raising the price of advertising in the UK, Austria and Turkey.
The announcement follows those governments’ imposing new taxes on revenues generated by the online platforms hosting and delivering ads. From November this year, ads served in those jurisdictions will attract an additional fee: UK (+2%), Turkey (+5%) and Austria (+7.5%) to cover the costs of taxes.
National advertiser associations in the UK and Austria had warned policymakers that the cost of these DSTs ‘digital services taxes’ were likely to be passed on to advertisers and advocated a global solution as a more effective way forward. Google claims that this move could also have impacts on its business by decreasing demand for its advertising products due to the increase in price.
Many countries have been exploring introducing similar types of taxes in order to compensate for a perceived lack of tax income from large digital platforms.
National DSTs target revenues generated from the provision of certain digital activities, including revenues created from selling online advertising space, facilitating the sale of goods and services and, in some cases, selling user data. In most cases, these taxes will only apply to companies with total global and national revenues above a certain threshold.
In Australia, the government is in the throes of applying a world-first mandatory code of conduct, to force Facebook and Google to pay Australian media companies for publishing their news stories. Anticipating resistance from the tech companies the Australian government has hinted at even more severe repercussions, saying they could drop the code and just apply a general tax on digital transactions similar to the UK, Austria and Turkey.
Other countries where DSTs are expected to come into force (or are under discussion) include France, Italy, Spain, Czech Republic, Brazil and Kenya. Google says that they have no systematic policy in place yet to pass on taxes as they come into force, but they haven’t ruled this out.
More to come.