Netflix Tax Set to Start in New Zealand

September 30, 2016 Taxation in New Zealand

Netflix TaxWELLINGTON – Digital products and services are about to get more expensive over the weekend, as the long-planned Netflix Tax takes effect.

From October 1st New Zealand will begin levying the so-called “Netflix Tax” on the cross-border purchase of remote services and intangibles.

The “Netflix Tax” is not a new tax, but is an extension of the existing GST system to encapsulate online purchases which were previously exempt from the tax.

From October onward, all overseas retailers who sell at least NZD 60 000 worth of intangible goods and services to New Zealand taxpayers will be required to register for GST in New Zealand, and collect the 15 percent tax on all purchases.

Retailers are expected to take reasonable steps to ascertain the true location of customers, and may need to analyse the IP addresses of purchasers, their credit card issuing location, billing addresses, mobile information, or fixed-line phone number.

Several major online retailers have already informed New Zealand customers that their prices will rise by 15 percent in order to pay for the extra tax.

However, as of yet, Netflix, the namesake for the tax, has not yet indicated whether they will pass the extra costs to consumers or whether they will take on the burden themselves.