Tax to be levied on overseas online purchases

A goods and services tax will be charged on overseas purchases such as music and e-books from October next year, New Zealand's revenue minister said on Monday.

Todd McClay said the proposed measures, contained in a tax bill, will apply a GST to cross-border "remote" services supplied by offshore suppliers to New Zealand-resident consumers.

The measures will require the offshore supplier to register and return a GST on these supplies. The bill includes products such as e-books, music, videos and software bought from offshore websites.

"To reduce compliance costs, offshore suppliers will not be required to return GST on supplies to New Zealand-registered businesses, nor will they be required to provide tax invoices," McClay said.

Nonresident suppliers will be required to register and return the tax when their supplies of remote services to New Zealand residents exceed NZ$60,000 ($38,900) in a 12-month period.

McClay said the move, which the government had announced earlier, is the first step in efforts to deal with increasing volumes of online services and purchases from overseas suppliers that should, under New Zealand's tax rules, be subject to the tax.

The government says that the increased volume of offshore online buying means it is losing about NZ$40 million in GST a year.

McClay said the government was also concerned about the no-tax threshold on low-value goods bought from overseas.

The growing volume of imported goods meant the amount of goods and services tax that was forgone was continuing to increase and raised concerns for domestic suppliers, McClay said.

The minister said customs authorities had been asked to consult on the logistical issues of collecting the tax on cheaper goods.

A consultation paper will be released in April to obtain feedback on the implications of streamlining the tax collection on low-value imported goods.

(China Daily 11/17/2015 page10)