Netflix won't be charging its New Zealand customers GST, prompting an outcry from rival local online TV service Lightbox.
US-based Netflix, the world's largest streaming television and film service, is set to launch in New Zealand next week -- but because it's based offshore, it's not required to charge GST.
"There are no local or federal rules requiring companies not based in New Zealand to collect GST on digital purchases," the company said in a statement on Tuesday.
Lightbox, which is owned by Spark, must charge GST because it's a New Zealand company.
"This is yet another example of the lack of a level playing field for digital services," Spark spokesman Richard Llewellyn said. "Lightbox was set up as a New Zealand company, playing by New Zealand rules and paying its fair share of New Zealand tax -- and we think others like Netflix New Zealand who are promoting themselves as a company selling services in New Zealand, to New Zealanders, should do the same."
New Zealand is among the OECD countries considering how to deal with the issue of collecting local taxes on offshore purchases, including digital services and downloads.
In a speech late last week, Revenue Minister Todd McClay said he has asked officials to look at how New Zealand could implement its own system to do this.
Prime Minister John Key said that while the GST on a NZ$1.29 song downloaded from iTunes would be just a couple of cents, it adds up over a massive number of transactions.
"There's no reason why GST shouldn't apply to that," he said.