Doubts Raised on New Zealand Netflix Tax

September 26, 2016 Taxation in New Zealand

Online shopping taxAUCKLAND – New Zealand’s new “Netflix Tax” is built on excessive optimism and will not help brick-and-mortar retailers, according to an expert.

Over the weekend Mark Keating, a tax law lecturer at the University of Auckland, suggested that the upcoming GST on digital goods and services purchased by New Zealanders from international providers may not be as effective as hoped.

Presently a New Zealander purchasing a digital good or service, such as media or software, from an overseas provider is not liable to pay GST of 15 percent.

However, from October 1st service providers selling digital goods and services to New Zealanders will be required to register for GST, collect the applicable GST, and pay the tax to the national Inland Revenue Department.

The tax measure has been dubbed the “Netflix Tax”, after the multinational media streaming business.

Mark Keating said that the design of the tax is based on “industrial-grade optimism” that retailers would be fully compliant with the tax, and added that “…it’s doubtful Inland Revenue can compel online retailers to act as voluntary tax collectors for online sales made to New Zealanders.”

Further, the tax would not fully protect regular retailers who are disadvantaged by GST-free online purchases, as the new tax does not extend to low-value physical goods bought by New Zealanders from overseas online retailers.