Allan Bullot is a tax partner at Deloitte.
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“The growth of online digital and overseas services means the volme of services on which GST is not collected is an increasing challenge – for the Government in terms of the GST revenue foregone, and as a matter of fairness for New Zealand suppliers of services and intangibles who must account for GST in their pricing structures”, McClay says.
In order to reduce compliance burdens, these new rules will not apply to businesses dealing with registered New Zealand companies.
US-based Netflix, the world’s largest streaming television and film service, launched in New Zealand earlier this year, prompting Spark to complain its Lightbox service was at a disadvantage because it was subject to GST.
New Zealand is powering ahead with a plan to tax digital goods and online services delivered from offshore providers such as Netflix.
In both cases, the ministers emphasise the importance of creating a level playing field.
McClay said the proposed measures in a tax bill introduced Monday will apply GST to cross-border “remote” services and intangibles supplied by offshore suppliers to New Zealand-resident consumers, by requiring the offshore supplier to register and return GST on these supplies. “This is what makes our GST system fair, efficient and simple”, says Mr McClay.
Spark is likely to be happy with the government’s move but lobby group Retail NZ says it delays a similar move for low-value goods.
The growing volume of imported goods meant the amount of foregone GST was continuing to increase and raise concerns for domestic suppliers, he said. In NZ, the new rules will be applied from October 1, 2016, and in Australia, it will come into effect nearly one year later from July 2017.
But Mr Carter said he would be concerned if Internet Protocol (IP) addresses were used by retailers to determine whether consumers were from New Zealand because this was a highly inaccurate method.
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In recent years the New Zealanders have turned to e-commerce and the main reason for the attraction is the lower prices of goods and services compared to bricks and mortar stores in the country.
