NZ Govt considers change to tax laws
Accountants are wondering whether the New Zealand government will move to tax millions of small parcels and services bought offshore in the May 21 budget, including digital downloads.
Australia acted on the issue in its budget a few days ago.
New Zealand Customs does not collect goods and services tax if the tax on the goods being imported is less than $60, and foreign providers of services do not have to account for New Zealand GST unless they are providing the services physically in the country.
Digital downloads such as movies, music, games and online subscriptions are effectively exempt.
New Zealand retailers and others are lobbying for change and the revenue minister is considering options.
PwC New Zealand partner Eugen Trombitas says separate solutions are needed for tax on goods bought offshore and services purchased offshore.
“In relation to goods, something like 12 million low-value parcels under the $400 mark are coming into New Zealand every year.”
Taxing them would be a massive amount of administration so any change must not cost more to administer than the tax collected.
Possible changes include cutting the threshold for GST to parcels containing goods worth $100.
The easiest way to tax services being purchased offshore is to tax the foreign seller, he says.
“Australia is moving in that direction,” he said.
In Australia, the price of streaming a movie, e-books, games and other digital products bought from overseas will go up by at least 10 percent 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 percent GST to digital products and services supplied from foreign businesses.
It is estimated to raise AU$350 million (NZ$377m) over the next four years for the states and territories.
