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NZ Seeks Feedback On Online GST Proposals

by Mary Swire, Tax-News.com, Hong Kong

18 August 2015


New Zealand's Revenue Minister, Todd McClay, has released a discussion document on the collection of goods and services tax (GST) on online purchases.

The paper, GST: Cross-border services, intangibles, and goods, contains proposals to require overseas suppliers to register for, collect, and remit GST when they sell services (including online products such as e-books, music, and videos) to New Zealand consumers. It also outlines the way forward for improving the collection of GST on all goods, including low-value imported goods.

"This document is an important first step in dealing with the increasing volume of purchases that should, under New Zealand's tax rules, be subject to GST," McClay said. "It is about creating a level playing field for collecting GST and putting New Zealand businesses and jobs ahead of the interests of overseas retailers, but it must be done with the least possible inconvenience to New Zealand consumers."

He said that the volume of services, online downloads, and goods purchased by New Zealanders from overseas suppliers on which no GST is paid is an increasing concern for the Government. "Current estimates put the amount of GST foregone on these purchases at approximately NZD180m (USD119m) a year, and growing at around 10 percent each year. That is revenue that would otherwise be available to the Government to help fund essential services like healthcare, education, and safer communities in New Zealand," he said.

"It is not just about the loss of revenue on these purchases, it is also about fairness. We recognize that New Zealand suppliers, including retailers, must charge GST on goods and services they supply to their customers, whereas offshore suppliers currently do not," McClay said.

Proposals released for public feedback would cover a wide range of services purchased by New Zealand residents from overseas suppliers. They include both digital services such as internet downloads and online services, as well as more traditional services such as legal and accounting services supplied remotely.

McClay said that the proposals are consistent with draft OECD guidelines due to be finalized and released later this year as part of the organization's wider recommendations on base erosion and profit shifting.

He said that while the discussion document primarily focuses on services, the fact that GST is not charged on low-value imported goods, below the Customs de minimis, is also of concern for the Government. The growing volume of imported goods means the amount of forgone GST is continuing to increase and raises concerns for domestic suppliers. "For that reason, the consultation document raises the matter for discussion. Customs is currently reviewing how the collection of GST on imported goods can be improved and is due to report to Ministers on the findings by October. "This is expected to be followed by a consultation process on the issue of de minimis," he said.

The deadline for submitting feedback on the proposals is September 25, 2015.

TAGS: tax | business | interest | commerce | accounting | goods and services tax (GST) | offshore | internet | education | e-commerce | New Zealand | tax reform | retail | services

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