Taxes pending on New Zealanders' offshore services buys

New Zealanders will soon have to pay sales tax when buying services and other intangible products, such as music, online from abroad, under a new law passed Tuesday.

Cross-border purchases would be subject to 15 percent goods and services tax (GST) from Oct. 1 under the Taxation (Residential Land Withholding Tax, FST on Online Services and Student Loans) Bill, Revenue Minister Michael Woodhouse said.

"Collecting GST from the growing volume of online sales across borders has been an issue of growing concern for some time, so the passing of this legislation marks a very important first step," Woodhouse said in a statement.

"Currently New Zealand providers are at an unfair disadvantage because they must apply GST to their services, whereas overseas providers do not. This creates an unfair playing field which this legislation will eliminate."

Other measures in the Bill included the introduction of a residential land withholding tax and an information exchange of student loan borrower details with Australia.

"These measures are also about ensuring fairness across our tax system," Woodhouse said.

"If a property has been bought and sold with the intention of making a gain, those gains have always been taxable. But it can be difficult for Inland Revenue to collect tax from the proceeds of such sales from foreign owners with no, or limited, presence in New Zealand," he said.

"This will be collected from the offshore seller at the point of sale and becomes payable from July 1, 2016." Endit