Australia’s recently proposed News Bargaining Incentive, essentially a “news tax” targeting large tech companies, appears to be a lifeline for journalism. It also reflects a growing push to make those companies pay for the value they extract from local economies.
The levy would begin in tax year 2025 and targets digital platforms with annual revenue from Australia exceeding AU$250 million ($156 million).
The proposal can be viewed as part of a global trend to use tax policy to redistribute profits between sectors and countries. Digital platforms have long benefited from content ecosystems they neither create nor directly support—whether it’s Alphabet Inc. profiting from search traffic driven by news articles or Meta Platforms Inc. monetizing user engagement with journalism.
Governments are wrestling with how to tax digital services and access the revenue these platforms generate. Australia’s proposal sidesteps the global debate over digital services taxes, which the US has criticized as unfairly targeting American companies.
By linking the levy to a tangible benefit for a specific industry, the News Bargaining Incentive positions itself as a solution to tech’s outsized power between sectors and as a test case for balancing the digital economy geopolitically. It redirects funds from tech to journalism and will enable Australia to capture locally-generated revenues that might otherwise have escaped its tax system entirely.
The impetus for the tax may have been Meta’s decision earlier this year to walk away from a voluntary deal, struck in 2021, which funneled millions into Australia’s media ecosystem. Meta has characterized the new initiative as an unfair subsidy taxing one sector to prop up another. Yet this framing ignores that tech platforms themselves are subsidized by the journalism they monetize.
Australia’s approach raises a salient question for the global digital economy: What is the fair price for the value tech platforms extract? Each round of policy proposals and industry negotiations edges us closer to an answer.
—Andrew Leahey
Welcome to the Week in Insights for Bloomberg Tax’s latest analysis and news commentary. This week, experts examined the Treasury’s notice on the OECD’s transfer pricing method, tax controversy related to the TCJA that could arise next year, and more.
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Insights
CBIZ’s John Bonk reviews implications of the state and local tax deduction cap’s expiration, saying that individual taxpayers and businesses must prepare for its sunset or extension.
Osler’s Pooja Mihailovich and Leandra Gupta say a proposal in Canada’s budget would allow the country’s revenue agency more discretionary power when conducting audits—but it would bring harsh consequences for noncompliance.
Baker McKenzie’s Joy Williamson and Amanda Kottke predict more regulations will be invalidated in court challenges in 2025 and that the IRS increasingly will shift legal strategy toward economic substance arguments to fend off such challenges.
Jones Walker’s Chris Wootten and Kevin Leftwich examine issues with the US opportunity zone program, saying that mandatory reporting and clearer rules would help the program thrive.
Deloitte’s Brandi Caruso, Sarah Rathgeb, and Robert Junge discuss challenges of Pillar Two requirements, suggesting they could transform business tax accounting systems.
RSM’s Ryan Corcoran offers 2025 corporate tax planning tips, advising businesses to pay close attention to R&D costs as well as asset and bonus depreciation.
DLA Piper’s Paul Flignor and Mike Patton analyze a notice on planned transfer pricing regulations, saying that the shifting political environment could reset the Treasury Department’s progress.
KPMG’s Pilar Galán Gavilá examines greenwashing hazards for companies, explaining that a lack of clear definitions makes compliance challenging.
Columnist Corner
Technically Speaking design by Jonathan Hurtarte/Bloomberg Tax
Child tax credit reform should bring back monthly payouts, simplify access through IRS Direct File, and encourage state-level matching programs—in addition to increasing the tax credit amount, Andrew Leahey says in his latest Technically Speaking column.
The Trump administration could deliver meaningful relief with bipartisan support, Andrew argues, writing that “building on the success of the earlier expansion with a few enhancements offers a clear path forward for the broader child poverty agenda.” Read More
News Roundup
US Guidance Out on Simplified Transfer Pricing Method
The IRS and Treasury Department released guidance on how companies can use the OECD’s simplified method to value certain transactions between related companies. Read More
Rich People Buy Tribal Tax Credits Treasury Says Don’t Exist
So-called sovereign tribal tax credits are being marketed to wealthy investors as a new way to escape looming or overdue tax bills. The problem, says the Treasury Department, is that they don’t exist. Read More
KPMG Posts $38 Billion in Fees Amid Stalled Advisory Growth
KPMG reported that fees across its global network brought in $38.4 billion in 2024 for the Big Four firm despite a sluggish advisory business that weighed down growth. Read More
Tomato Suppliers to Change Accounting Method After IRS Tax Audit
California tomato suppliers will need to change their accounting method after the Ninth Circuit determined an IRS audit requirement was necessary. Read More
Tax Management Memorandum
EY national tax principal Christa Haas Bierma explains in detail how paid family and medical leave is taxed at the federal level.
Career Moves
Elizabeth Rothery and Aaron Larvin joined Clive Owen in its tax division in Newcastle.
Navin Sethi joined EisnerAmper as a tax partner in its financial services group.
Olivier Lambillon was promoted to partner at Osborne Clarke in Brussels.
Michael Oppenheimer was promoted to an executive compensation and employee benefits partner at Morrison Cohen.
If you’re changing jobs or being promoted, send your submission to TaxMoves@bloombergindustry.com for consideration.