Online GST to hit Netflix, Apple services

Online GST to hit Netflix, Apple services

The Government is moving to slap the goods and service tax on online service purchases, which will mean a price rise for the likes of subscriptions to Netflix and Apple services.

It is proposing a law change which will require the overseas retailers to be GST-registered and for them to return the tax to the Government - which says it is now missing out on around $40 million a year and growing.

Currently if you buy anything worth less than $400 from overseas you don't have to pay the 15 percent GST.

"It is about creating a level playing field for collecting GST and putting New Zealand businesses and jobs ahead of the interests of overseas suppliers," Revenue Minister Todd McClay said.

The Bill was introduced to Parliament today and the Government hopes the law will be in place in October next year.

The GST will also apply "cross-border remote services and intangibles" - things 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.

The Government says companies are likely to comply with the requirement to protect their reputations.

US-based Netflix, the world's largest streaming television and film service, launched in New Zealand earlier this year, prompting Spark to complain its Lightbox service was at a disadvantage because it was subject to GST.

Spark is likely to be happy with the Government's move but lobby group Retail NZ says it delays a similar move for low-value goods.

"If we are going to have GST, it needs to apply across the board," said spokesman Greg Harford.

"It makes no sense to make massive global firms like Amazon register and charge GST on an e-book at the point of sale, but not a physical book."

The Government says it is looking at the problem and Customs will release a discussion paper next year on the practicalities of taxing low-value items - estimated to be worth $140m in GST each year.