New Zealand to charge GST on overseas online purchases

New Zealand Revenue Minister Todd McClay said Monday that overseas purchases such as music and e-books will be charged Goods and Services Tax (GST) from October next year.

McClay said the proposed measures in a tax bill introduced Monday will apply GST to cross-border "remote" services and intangibles supplied by offshore suppliers to New Zealand-resident consumers, by requiring the offshore supplier to register and return GST on these supplies.

It includes products such as e-books, music, videos, and software purchased from offshore websites.

"To reduce compliance costs, offshore suppliers will not be required to return GST on supplies to New Zealand-registered businesses, nor will they be required to provide tax invoices," McClay said.

Non-resident suppliers will be required to register and return GST when their supplies of remote services to New Zealand residents exceed 60,000 NZ dollars (39,165 U.S. dollars) in a 12-month period.

McClay said the move which the government had earlier announced is the first step in the efforts to deal with increasing volumes of online services and purchases from overseas suppliers that should, under New Zealand's tax rules, be subject to GST.

The New Zealand government claimed that the increased volume of offshore online buying meant the government was losing about 40 million NZ dollars (26 million U.S. dollars) in GST a year.

McClay said the government was also concerned at the no-tax threshold on low-values goods bought from overseas.

The growing volume of imported goods meant the amount of foregone GST was continuing to increase and raise concerns for domestic suppliers, he said.

The minister said customs had been asked to consult on the logistical issues of collecting GST on cheaper goods, and will release a consultation paper in April next year to get feedback on the implications of streamlining GST collection on low-value imported goods. Enditem