The price of streaming a movie, e-books, games and other digital products bought from overseas will go up by at least 10 per cent under the new so-called Netflix tax in what Treasurer Joe Hockey says is a levelling of an unfair playing field.
The new rules will apply the 10 per cent GST to digital products and services supplied from foreign businesses.
It is estimated to raise $350 million over the next four years for the states and territories.
"It is unfair that overseas-based businesses selling services into Australia may not charge GST when local businesses have to charge GST," Mr Hockey said.
"A local business that employs Australians, pays rent in Australia, pays tax in Australia, and helps build our economy is disadvantaged by the current system."
Other online companies Airbnb, Uber and Netflix could also be caught in the new tax net.
Similar rules have been or will be introduced in Japan, Norway, South Africa, South Korea, Switzerland and members of the European Union, according to budget papers.
However other low value goods bought online from overseas have escaped the GST.
The GST was designed to apply to all products and services, except for specifically exempted products food, health and education, and the new measures closed that loophole, the papers said.
NETFLIX TAX TO LEVEL PLAYING FIELD
* Foreign firms selling digital products, services in Australia to pay GST
* Applies to downloaded movies, games, e-books and maybe Airbnb, Uber, Netflix
* Forecast to raise $350m over next four years
* Designed to level playing field for Australian businesses.
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