Changes to online GST could be in the works with a discussion document set to be released and Prime Minister John Key is in favour of it.
Revenue Minister Todd McClay put the idea before Cabinet today, and Mr Key said while no decision had been reached yet, the document would discuss adding GST to online services such as iTunes and for importing goods.
Currently, Kiwis buying things online don't have to pay GST on purchases under $400, which is the second-highest in the OECD.
It isn't included on imported digital products such as music and films.
The Australian government, which has a threshold of AU$1000 for imported goods, is looking at reducing it to AU$20 or possibly lower. It has already introduced a 10 percent digital services GST which was announced in this year's Budget.
Mr Key said at his post-Cabinet news conference today people should have to pay for online services. It is already a "well-trodden path" overseas, including Europe and works, he said.
"In principle, if you buy Sky TV and pay for that in New Zealand you pay GST for the Sky services you get. Why shouldn't you pay if you take Netflix from offshore or something like that?"
The price point on products doesn't matter, he says.
"If you go down the road and buy a lolly for 10c, you pay GST on it."
The $400 threshold would make up part of the document and would be a "more complicated nut to crack" for officials, Mr Key says.
Once a decision is made on whether adding the tax would go ahead or not, the Government would look at implementing it "relatively quickly", given a number of other countries already have them in place.
"It's really about the registration of some of those big companies. In terms of the purchase of goods that come across the border, that's more challenging – we're working on that – I think we'll get there, but it'll take a bit more time."
If it goes ahead it could be in force by Christmas, though Mr Key said that'd be "a little optimistic".
New Zealand officials are currently talking with their Australian counterparts on the issue with some sticking points including the best way to record whether the GST has been paid on the documentation.
Mr Key says while Australia's AU$1000 threshold is an "outlier" amongst other countries, New Zealand isn't that much better compared to other jurisdictions such as Canada and Europe which are much lower.
Introducing the GST will make the system fairer for New Zealand retailers, Mr Key says.