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New Zealand To Levy GST On Online Purchases

by Mary Swire,, Hong Kong

11 May 2016

Cross-border purchases by New Zealand residents of services and other intangibles such as music bought through offshore providers will be subject to goods and services tax (GST) from October 1, 2016.

The changes are contained in the Taxation (Residential Land Withholding Tax, GST on Online Services and Student Loans) Bill, which was passed in Parliament on May 10, 2016, Revenue Minister Michael Woodhouse said.

"Collecting GST from the growing volume of online sales across borders has been an issue of growing concern for some time, so the passing of this legislation marks a very important first step," Woodhouse said. "Currently New Zealand providers are at an unfair disadvantage because they must apply GST to their services, whereas overseas providers do not. This creates an unfair playing field which this legislation will eliminate."

Other measures in the bill include the introduction of a residential land withholding tax. "If a property has been bought and sold with the intention of making a gain, those gains have always been taxable. But it can be difficult for Inland Revenue to collect tax from the proceeds of such sales from foreign owners with no, or limited, presence in New Zealand," Woodhouse said. "That's why the residential land withholding tax builds on the new bright-line test and is aimed specifically at offshore vendors. This will be collected from the offshore seller at the point of sale and becomes payable from July 1, 2016. This change will help ensure that the lawful amount of tax that should be paid is collected."

TAGS: tax | property tax | law | goods and services tax (GST) | offshore | legislation | withholding tax | New Zealand | services | Withholding Tax | Other | Tax

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