Policing GST payments tricky — Govt
WELLINGTON: The Government admits it has no way of policing whether foreign companies pay GST on goods sold online to New Zealanders.
Small Business and Revenue Minister Stuart Nash and Customs Minister Meka Whaitiri announced in Wellington yesterday that foreign companies will be asked to pay GST on such goods from October next year.
However, the 15% tax on the value of the goods will essentially be voluntary.
Mr Nash said there was no way for the Government to effectively police it.
He said the Government was expecting ‘‘about 75% compliance’’, amounting to about $57 million within the first year.
Mr Nash said those companies supplying more than $60,000 of goods or services would be asked to sign up for GST collection.
‘‘We can give them all the information that we require to help them sign up but it’s about the credibility of their organisations as well.
‘‘I think it’s much fairer to the retailers,’’ Mr Nash said.
The new law follows on from the ‘‘Netflix tax’’, which started in October 2016 and which required foreign providers to levy GST on digital services sold to New Zealanders including Netflix, Spotify, iTunes, Kindle, online games and software.
He said despite the difficulty with policing the rule, there would be penalties for overseas companies that did not comply.
‘‘If you’re buying something on Amazon, it will be Amazon’s responsibility to pay tax on that.’’
Ms Whaitiri said the move would change how GST was collected, so that instead of applying at the border it would apply at the moment of sale.
‘‘And in turn, buyers of these
goods will no longer pay Customs tariffs or border security and biosecurity fees.
‘‘This will simplify compliance and administration costs at the border,’’ she said.
The system would not change for goods over $400, however. — RNZ