Netflix’s tiny Australian tax bill revealed

Netflix earnt hundreds of millions of dollars from Australian customers in 2021. But its tax bill was tiny in comparison to its revenue.

Netflix paid less than a million dollars in tax 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 amounted to $868,000. It reported a profit of $1.5 million from revenues of $30.7 million, which related to back-end operations such as payment processing.

The real thrust of Netflix’s earnings – revenue from customer subscriptions – were not subject to Australian taxes because local subscribers were billed through an entity based in the Netherlands.

The Netherlands is a low-tax jurisdiction and Netflix’s accounting actions are legal. SMH said Netflix intended to bill Australian customers through Australia from January 2022.

While Netflix does not reveal region-specific subscriber numbers outside of North America, industry analyst Telsyte estimated Netflix has six million members in Australia.

With the cheapest Australian subscription at $10.99 a month and topping out at $22.99 a month, six million accounts would translate to between $791 million and $1.65 billion in revenue.

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The widely panned and forgettable Tidelands was Netflix’s first Australian original. Picture: Jasin Boland/Netflix

Netflix has stepped up its local commissions since its first Australian title, the widely panned supernatural drama Tidelands, which starred Elsa Pataky, in May 2017.

The streamer has since released controversial reality series Byron Baes, which raised the ire of locals over fears of how the popular holiday town would be portrayed, Chris Lilley’s Lunatics, animated feature Back To The Outback and documentary Puff: Wonders Of The Reef.

It has in the works a Heartbreak High reboot, the Celeste Barber-starring dramedy Wellmania and Jessica Watson biopic True Spirit.

Australia also played host to a raft of Netflix titles that were co-productions with the US.

There was the thriller series Clickbait, which was filmed in Melbourne but featured an American story and an American lead cast.

Upcoming is the Elsa Pataky-led action feature Interceptor, directed by Australian writer Matthew Reilly who adapted his own book, although it’s understood Interceptor was commissioned out of the US team.

Melissa McCarthy series God’s Favourite Idiot filmed early episodes in northern NSW before the production unexpectedly wrapped early. It’s expected the remaining episodes will be filmed later in the US.

Back To The Outback featured the voice talents of Tim Minchin, Isla Fisher, Guy Pearce and Miranda Tapsell. Picture: Netflix

Netflix and other international streamers including Amazon Prime Video and Disney+ have been actively investing in Australian productions while at the same time trying to stave off government intervention in the market.

Local production interests and artists have been advocating for a mandated quota so that international entertainment companies would be obliged to invest a certain percentage of their revenue on making Australian TV and movies.

Globally, Netflix has had a tumultuous few months with its stock price tumbling 70 per cent since the beginning of the year, wiping tens of billions of dollars off its value.

The company revealed in April it posted a net loss of 200,000 subscribers in the first three months of the year, and expected to lose a further 2.5 million in the current quarter. The news led to a sell-off of its stock as investors fretted over the long-term growth trajectory of the business.

As a result, Netflix executives committed to roll out drastic changes to its operation model.

Netflix said it would introduce by the end of the year a cheaper advertising-supported membership tier and crack down on password sharing.

It has also started to cut costs including axing the head of its animation department as well as several staffers and projects including the Meghan Markle series Pearl.

Originally published as Netflix’s tiny Australian tax bill revealed