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GST proposed for online services

The government is proposing to make overseas providers of services like music, videos and ebooks pay GST.

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But whether New Zealanders will also have to pay tax on low-value imported goods is awaiting a report from Customs, which is looking at options for simplifying GST collection. Currently, only goods with a value more than $400 are subject to GST.

No other countries yet charge GST on low-value products but New Zealand will be following European Union countries, as well as Australia, if a tax on services from overseas goes ahead.

The discussion document, released by Revenue Minister Todd McClay, said domestic retailers were at a competitive disadvantage compared with offshore suppliers. The amount of GST not being collected on imported goods and services was estimated at $180 million a year. Under the proposal, overseas suppliers of services would have to register and return GST if their supply to New Zealand residents exceeded a to-be-decided threshold in a year. Taxable services would include digital services, such as streaming music and video, and traditional services, such as legal and accounting services.

Submissions on the discussion document close on 25 September 2015.

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