Fewer on-line purchases to escape GST

At present, GST is not charged on imported digital products such as music, films and games that are downloaded or streamed from overseas and cloud software services that are hosted abroad.

Physical goods bought online worth less than $400 also generally escaped GST because the combined value of the tax and duty payable was less than $60.

Revenue Minister Todd McClay has? asked officials to look at the measures other countries were taking to collect GST-type taxes, saying they appeared to be increasing the amount of tax collected.

This is the same Todd McClay that can’t get the IRD to bring its IT project in without a 600% budget overrun. ? Nice to know he’s coming for more of our money. ?

Spokesman Greg Harford said the $60 tax threshold meant New Zealand retailers could not compete with foreign websites. The association has also estimated it is costing the Government $200 million to $300m in lost revenue.

South Africa became the first country to try to charge GST on digital imports in June, when it required overseas firms to register for GST on electronic services they supplied to South African customers.

Speaking at the Institute of Financial Advisers annual conference in Queenstown, McClay appeared to give a nod to domestic retailers, saying it was important GST was fair to “consumers, retailers, and all taxpayers”.

“Where tax is not paid by one group, it must be made up for by another,” he said.

A number of countries had implemented policies to tackle?”offshore purchasing” and digital downloads, he said.

“Early indications are that these measures are having their desired effect. I have therefore instructed officials to report to me in the short term on these developments and their suitability for implementing as part of the New Zealand tax system.”

However, McClay also said the Organisation for Economic Co-operation and Development (OECD) appeared to be making good progress developing international rules that would help countries plug gaps in the collection of GST.

Isn’t it nice to know McClay is so efficient at getting more taxes organised while behind him the IRD is falling apart under indifferent management and limp wristed oversight.

 

– Tom Pullar-Strecker, Stuff

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