New Zealand to tax offshore online services

Good and Services Tax to apply to online services and digital goods delivered from offshore from October 2016.

New Zealand is powering ahead with a plan to tax digital goods and online services delivered from offshore providers such as Netflix.

Todd McClay

Introducing a Bill into Parliament today, revenue minister Todd McClay said the proposed measures were about fairness and equity.

"It is about creating a level playing field for collecting GST and putting New Zealand businesses and jobs ahead of the interests of overseas suppliers", he said.

"GST should apply to all consumption that occurs in New Zealand. This is what makes our GST system fair, efficient and simple."

Overseas providers of such goods and services will have to register and collect the tax and account for it to New Zealand Inland Revenue. The proposed new rules would come into force on 1 October 2016.

McClay said the measure was an important step in dealing with increasing volumes of online services and "intangibles" such as e-books, music, videos, and software purchased from overseas.

To reduce compliance costs, offshore suppliers will not be required to return GST on supplies to New Zealand-registered businesses, nor to provide tax invoices.

Non-resident suppliers will have to register and return tax when their supplies of remote services to New Zealand residents exceed NZ$60,000 in a 12 month period.

Australia has already announced plans to introduce similar rules from 1 July 2017.

McClay said the fact that GST was not charged on low-value imported goods was also of concern.

Customs minister Nicky Wagner said Customs has begun work to determine options to streamline the collection of duty on such low-value physical imports currently below the "de minimus" threshold applied at the border.

"Several approaches to changing the de minimis and streamlining the collection of duty on import consignments have been developed. These include moving to a value-based de minimis, reducing the de minimis and retaining status quo," she said.

Customs will test these with stakeholders before finalising proposals for public consultation in April 2016.