'Netflix tax' will see prices go up by 15pct

Netflix is yet to comment whether its prices will go up after October 1 or it will absorb the GST into its existing cost (AAP)
Netflix is yet to comment whether its prices will go up after October 1 or it will absorb the GST into its existing cost (AAP)

GST on all online purchases in New Zealand comes into effect on Saturday, but it's unclear if that will mean a price rise for the likes of subscriptions to Netflix and Apple services.

But the price of Skype calls to landlines and mobile phones is expected to go up 15 percent, as well as the prices of Adobe software and some Google consumer services.

Subscribers to streaming music service Spotify will see no change, as the company has paid GST in New Zealand since launch.

The law change will require overseas retailers to be GST-registered and for them to return the tax to the Government, who says it is missing out on around $40 million a year.

The GST will also apply to "cross-border remote services and intangibles", such as e-books, music, videos and software.

Offshore suppliers will be required to register and return GST when their supplies to New Zealand residents exceed $60,000 in a 12-month period.

According to its website, Netflix will charge the current rate of $12.99 per month for its standard service and $15.99 for its premium service for new customers who have a one-month free trial ending on October 1.

But Netflix is yet to comment as to whether its prices will go up after that date or it will absorb the 15 percent GST into its existing cost.

"Netflix only charges the monthly subscription fee, which may or may not include local tax depending on your location," it says on its website.

US software company Adobe said in an email to customers its prices will go up by 15 percent from October 1.

"Starting 1 October 2016, in accordance with New Zealand GST laws, Adobe and other non-resident companies are required to charge 15 percent GST on all electronic services to consumer customers. Your next bill on or after this date will reflect the new tax rate."

Google for Work subscribers were also notified they would be paying an extra 15 percent, but the company was unclear whether prices would also go up in the Google Play Store.

"Google is working to be compliant with the prescribed amended GST rules that would be effective October 1 for all transactions on Google Play Store," the company said in a statement to Newshub.

Apple and Amazon have not replied to Newshub's requests for comment on the new law.

One of the biggest proponents of the law change was telco Spark, who said its Lightbox streaming service was competing on an uneven playing service to Netflix because the company didn't have to pay GST.

Newshub.

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