"But it is a step in the
right direction and to be fair, the systems for taxing
physical goods are a lot more complex."
The government was still
in the process of deciding what the threshold for
registering for GST would be - the current threshold is
for more than $60,000 per annum, but Smith said the
government may decide to lower this, requiring smaller
vendors to also register for GST in New Zealand.He said
international experience had shown the implementation of
taxing on services was successful with most large
corporations voluntarily registering for GST.
Deloitte tax partner Allan
Bullot said the move was a clear signal from the
government that they were going to look at the overall
online sales system.
"They're clearly saying
enough is enough and we're going to have to change these
rules to bring them within the system," Bullot said.
"But they are still trying to take a bit of a measured
approach and trying to have a system that doesn't impose
greater cost to collect than the actual tax that they
collect," he said.
"It's not surprising that
services looks like it will be hit with GST earlier than
goods because the practicality of how you collect GST on
low value goods is still a world wide issue."
One of the main issues the
government could have on taxing services according to
Smith, was around the definition of imported services,
with the possibility that consultants overseas giving
advice via the internet or email could also come under
the definition of a service, and may then be required to
pay tax. Another issue was around identifying private or
business consumers.
"If you are supplying the
services to a business customer, you do not have to
charge GST to that customer but the practical issue is
really around identifying who is a business customer and
who is a private customer," Smith said.
Spark chief executive
Simon Moutter had previously highlighted what he said
was an unfair advantage that companies such as video on
demand business Netflix had through not paying tax, when
Lightbox, which was based in New Zealand, did have to.
Although he welcomed the
fact that the government was looking at making changes,
he said there were other issues around tax avoidance
that also needed to be addressed.
"It's encouraging that the
Government is taking steps to ensure that our tax system
better reflects the realities of an increasingly
globalised and digital economy," Moutter said.
"But it's not just online
GST (which will simply be collected from already tax
paying New Zealanders), the much bigger issue of
corporate taxation avoidance by multinational companies
operating digital services across borders also needs to
be addressed."
Source:
The NZHerald , dated 18/08/2015. |