Australia Enacts Legislation to Tax Tech Companies That Don’t Fund Local News

On Thursday, Australia passed legislation requiring internet companies to pay levies totaling millions of dollars if they are unable to reach commercial agreements with local media sources for news on their platforms.

Unless they reach deals, the News Bargaining Incentive taxes the companies 2.5% of their advertising revenue.

The program’s proceeds would go to regional Australian news organizations whose content boosts user interaction and advertising income on the platforms of the internet companies.

The levy covers companies with a “significant” social media or search service in Australia and local advertising revenue exceeding A$250 million ($178 million), including Meta (META.O), Alphabet’s (GOOGL.O), Google, TikTok, and Microsoft’s (MSFT.O), and LinkedIn.

By signing contracts with at least eight separate publishers by the conclusion of their reporting period, platforms can avoid the fee. Their levy liability would be deducted from the value of such transactions.

According to the regulations, the agreements must either facilitate the creation of news material or be related to news content created by the publishers that the platform makes available online.

Spending with small and medium-sized outlets carries a 200% offset, and spending with large publications carries a 150% offset.

Additionally, a single transaction cannot exceed 25% of a platform’s levy obligation.

“Now that the law is in place, platforms have a clear message to pursue commercial arrangements. In order to be utilized to offset a digital platform’s liability during that period, deals must be finalized before the end of their financial reporting period, according to a statement from the government.

For Australian news organizations and journalists, today is crucial.