GST on Airbnb, Uber a ‘world first’

The world will be watching the Government’s plan to make ‘‘platform economy’’ companies such as Airbnb and Uber levy GST on services booked through their websites, a tax expert says.

PWC tax partner Eugen

Trombitas forecast the GST change would raise at least $100 million a year in tax revenue, which he assumed would feed through into higher prices for Airbnb accommodation and Uber trips.

Under a tax bill unveiled last week, digital platforms providing ride-sharing, food and beverage delivery, and short-stay and visitor accommodation would need to levy GST on bookings made through their platforms.

That would change the current situation, under which the likes of Uber drivers and Airbnb hosts are responsible for levying GST on their services themselves but only need to do so if they are over the

$60,000 revenue threshold at which businesses need to register for GST.

Uber has confirmed that most of its drivers fall under the $60,000 threshold, meaning that most Uber trips would be free of GST today.

It is understood that the overwhelming majority of Airbnb hosts are also below the threshold.

Under the proposed new rule, GST would need to be levied by the platform providers themselves, regardless of whether their hosts or drivers were registered for GST.

Trombitas said the Canadian Government had implemented a comparable rule for accommodation businesses such as Airbnb, and India had a similar rule for ride-sharing services such as Uber and food and beverage services.

But New Zealand’s model would be the widest application of such a tax change, he said.

‘‘Everyone will be watching. We’re kind of setting the pace here.’’

The tax bill might need to be tweaked to remove the obligation

‘‘We’re kind of setting the pace here.’’ Eugen Trombitas PWC tax partner

for platform companies to charge GST on their service fees to hosts and drivers, in order to ensure there was no ‘‘double-up’’ of tax, he said.

Under the Government’s proposal, drivers and hosts who are below the threshold would not need to register for GST to offset the GST they had paid on supplies against the GST that will be levied by their platform provider. Instead, their platform provider will be required to return just over half of the ‘‘GST’’ they collect, to them, as a proxy for the input tax offset they would otherwise be able to claim.

STUFF Most Airbnb bookings are free of GST, because hosts are under the $60,000 GST threshold, but that would change once Airbnb itself became responsible for levying the tax.