A Government move to tighten tax rules for multinational digital companies is overdue.

So the announcement that: "Cabinet has agreed to issue a discussion document about how to update our tax framework" was hardly a bombshell.

In fact the timing - soaking up most a post-Cabinet press conference in which the Prime Minister was facing intense scrutiny on China relations - seems a bit cute.

The big report from the Government's Tax Working Group is due to be made public on Thursday and is likely to recommend a similar moves.


On other more contentious issues, such as the Capital Gains Tax proposal, the Government has said it will make no comment until April.

Compared to capital gains, a digital services tax looks like an easy win.

France and Australia have already begun the process of introducing them.

The entire OECD is heading in that direction - albeit slowly - working through a multi-lateral approach.

The issue of what to do about another global tech giant - Chinese telco Huawei - now that the UK has allowed it to take part in its 5G build, seems somewhat more pressing.

The language used by the PM and her minister today was strong.

There's no doubt the new tax is coming. But this was not an announcement that will have Google, Apple or Microsoft quaking in their boots.

It was certainly not radical in the style of offshore oil and gas ban.


Globally the big digital players already see the writing on the wall.

They will see here a chance to work through an orderly process and, presumably, argue the case for a tax system which collects revenue closer to the lower end of the Government's $30-$80 million revenue.

There is no slam dunk on enforcement with these guys- at least until a multi-lateral rules are in place.

The Australian Government managed to get $37 million in tax from Google in last fill financial year but ended up fighting complex legal battles over the companies accounting methods.

Nothing in the tax world is easy - as the report on Thursday will show.

This is a positive step from the Government - but a relatively cautious one.