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News October 27, 2015

New Zealand to introduce GST on downloads

Senior Journalist, B2B
New Zealand to introduce GST on downloads

Consumers in New Zealand could be paying GST of possibly 15% for music, movie and games downloads and streaming for the first time by Christmas. The so-called Netflix tax would bring a benefit of NZ$40 million (A$$35.8 million) a year.

Prime Minister John Key says that the Government is losing about $180 million ($161.3 million) in tax on online purchases, a figure that is rising each year. A third of the country’s $4 billion ($3.58 billion) annual online spend heads overseas.

He said, "The Government's trying to balance up the need to be both fair to existing retailers who have bricks and mortar on the ground, the fact that we've got a hole in our revenue accounts as more and more purchases are happening online, but also reflecting the fact that consumers both for convenience.”

According to a Nielsen study last year, 56% of New Zealanders (1.9 million) shop online. Over 100,000 (or 6%) took to it in the past year.

The Government is also looking at expanding GST on physical goods bought abroad, as clothes, printed books and consumer electronics. These are currently exempt if under $400 ($358). But it is more likely to go for downloads first as other countries have already implemented it or, like Australia, going down that path.

Retail New Zealand CEO Mark Johnston expressed concern the Government intended to deal with digital services ahead of goods.

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