New Zealand Enacts “Netflix Tax”

November 17, 2015 Taxation in New Zealand

WELLINGTON – New Zealand consumers will soon be paying more for online movies, songs, and ebooks, as the government announces that such goods will now be liable for GST.

On November 16th the New Zealand government announced that from October next year overseas businesses selling digital goods and services to New Zealand consumers will be liable to pay the local Good and Service Tax at a rate of 15 percent.

The New Zealand GST system is widely regarded as being one of the most efficient in the world, with few exemptions and a nearly uniform rate across all goods and services, however the simplicity has resulted in a situation where digital goods and services bought overseas not falling within the system, despite being consumed by national taxpayers.

Under the newly clarified rules, all overseas suppliers who see a turnover of more than NZD 60 000 in year in New Zealand will be required to register with the national tax authority, apply for GST registration, and pay any GST liability owing from their activities.

The new rules have already come to be called the “Netflix Tax”, after the popular online video streaming services which launched its New Zealand services recently.

In order to reduce compliance burdens, these new rules will not apply to businesses dealing with registered New Zealand companies.

Explaining the need for the new rules, the Revenue Minister Todd McClay claimed that the rising levels of digital imports mean that the government is seeing an increase in the amount of foregone revenues from the collection of GST.

Photo By: Adrian Korte