Netflix Likely to Become Reality in New Zealand

August 18, 2015 New Zealand Taxation

The government is taking a close look at the feasibility of charging GST online digital purchases, even if the supplier is not based in New Zealand.

The Revenue Minister Todd McClay has released a new discussion document, calling for public input on the proposal to implement GST on the purchase of intangible digital goods purchased from online retailers registered overseas.

Currently, such digital purchases do not fall under the scope of GST, leading some local retailers to claim that such offshore businesses have an unfair advantage over their New Zealand counterparts.

Similar proposals around the world to implement consumption taxes on digital goods have commonly come to be called “Netflix Tax”, as they are often targeted at the large-scale international media streaming service.

The discussion paper also covers the purchase of tangible goods from overseas, as currently goods which are purchased from offshore suppliers may not be charged GST if the value of the good is below NZD 400.

The discussion paper calls for GST to be levied in line with guidelines and methodology previously outlined by the OECD.

It is estimated that the exclusion of digital goods and low priced goods from GST results in a loss in potential tax revenues of approximately NZD 180 million per year.

Photo By: StormKatt