Microsoft Australia's taken further steps to ensure that Australia's goods and services tax (GST) is collected on apps sold at the Microsoft Store.
The company last week quietly updated its App Developer Agreement from version 8.1 to 8.2, with the changelog noting that the new version "Updated tax language to: (i) grant Microsoft Affiliates the right to remit taxes on behalf of New Zealand App Developers, (ii) clarify new GST registration requirements for New Zealand App Developers who make paid apps/in-app products available in the Store, and (iii) updated the Microsoft Subsidiary acting as agent in Australia and New Zealand."
The Register has since confirmed that the change was made to ensure compliance with updated legislation that recognises that digital goods may be sold with infrastructure hosted offshore, but that a company with a local presence effectively sells them in Australia and must therefore collect GST from buyers and pass it on to Australia's federal government.
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Microsoft already changed the Agreement to meet the July 1, 2017, deadline for the new tac collection rules. The company declined to comment about the February 14th, 2018, change on the record, perhaps a reflection of the torrid times its experienced attempting to explain its tax practices to the Senate Economic References Committee (PDF)in 2017 and a a 2013 Parliamentary Inquiry into IT pricing.
Adobe complied with that new law in September 2016 for its cloud services. It's not immediately apparent why Microsoft needed more time to make and/or formalise the change.
The relevant section of the updated App Developer Agreement is 4.a.ii. For those of you who like poring over legalese, here it is:
4.a.ii Further, for any transactions that involve a purchase of your App or In-App Products by an Australian Customer (as determined by Microsoft), you understand and agree that Microsoft has assigned its right to act as your agent or commissionaire, as applicable, to Microsoft Regional Sales Corporation, located at 438B Alexandra Road #04-09/12 Block B, Alexandra Technopark Singapore 119968 ("MRS"), or Microsoft Pty Ltd, located at 1 Epping Road, North Ryde, New South Wales, Australia 2113 ("MPL"), and you and MRS or MPL (as the case may be) agree for the purposes of Section 84-60 of the AU GST Act that: (I) Section 84-55 of the AU GST Act applies to sales of your Apps or In-App Products made available by you through the Store as if such sales were an inbound intangible consumer supply; and (II) for the purposes of the GST law, MRS or MPL (as the case may be) is treated as the supplier of and as making the supply for consideration for which it was made. The terms "consideration," "GST," "GST law," and "inbound intangible consumer supply" in this section have the meanings given to those terms in the A New Tax System (Goods and Services Tax) Act 1999 (the "AU GST Act").
The Register understands the reference to Microsoft Regional Sales Corporation in Singapore means that entity, in addition to Microsoft Australia, could pay the GST. ®