‘Netflix Tax” Gets Nod of Approval in New Zealand

March 24, 2016 Taxation in New Zealand

WELLINGTON – Digital books, downloads, and media are set to become more expensive in New Zealand, as new GST rules are given the go-ahead.

Earlier this week the Select Committee for Finance and Expenditure appointed by the Parliament of New Zealand gave its approval to legislative changes extending the scope of GST to cover purchases of intangible goods from overseas suppliers.

Currently in New Zealand intangible goods, such as services, software, or media, purchased from an online retailer located outside of the country do not fall under the scope of the 15 percent Goods and Service Tax.

The newly approved regulations will extend GST to cover such goods and services, but only if the supplier exceeds a threshold of NZD 60 thousand of sales in New Zealand per 12-month period.

The new tax rules have come to be called a “Netflix Tax”, after the popular online streaming service came to be one of the main examples of overseas suppliers not paying GST in New Zealand on goods consumed in the country.

It is expected that the new regulations will receive Royal Ascent by the end of April, and would come into effect on October 1st.

The Select Committee recommended that a small transition period be instated after October 1st to help overseas suppliers comply with the new rules.

The national tax authority, the Inland Revenue Department, is expected to issue new guidance soon on how it will monitor and enforce compliance by offshore providers with no presence in the country.

Photo By: ozcast