Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search

 


Taxing the Digital Economy

FOR IMMEDIATE RELEASE – 26TH MARCH 2014

Taxing the Digital Economy

“Proposals by the OECD aimed at addressing the tax challenges of the digital economy could have significant implications for New Zealand businesses and consumers.”
Peter Scott - KPMG’s head of indirect tax services

The proposals draw attention to the loss of GST revenue as the popularity of online shopping grows with Kiwi consumers.

Among the options canvassed by the OECD are the use of countries’ GST regimes to tax the digital economy and online sellers. The UK is the latest European country to move to tax cross-border internet sales at their domestic GST rate. The US Senate has recently approved legislation for State Governments to enforce collection of sales taxes by online retailers based in other States.

“Businesses around the world have been able to significantly increase their market and sales to customers in foreign jurisdictions through the use of online shopping. This has reduced the local GST revenue as these supplies via the internet result in little or no GST being collected. This presents a huge challenge for our traditional GST collection system.” says Scott.

The OECD suggests lowering or removing customs exemptions for low value imported physical goods. In New Zealand, there has been pressure from local retailers for Government to reduce the GST exempt import threshold of $400. This would satisfy the demands of “bricks and mortar” store retailers but Peter Scott points out, “There would be increased compliance costs for businesses and greater administrative costs to the Government.”

A New Zealand discussion document on lowering the GST exempt import threshold was due late last year, but has been deferred pending a wider review of BEPS [Base Erosion and Profit Shifting] issues by New Zealand officials.

“There is an obvious challenge in enforcing compliance from non-resident suppliers and this has been recognised by the OECD. Nevertheless, requiring non-residents to charge and collect GST has been identified by the OECD as the most viable option to protect GST collections,” according to Peter Scott.

“The reality is we are going to see some changes in New Zealand, and around the world, to collect GST on internet sales. In New Zealand, the challenge will be how quickly and effectively any changes can be implemented without imposing significant system and compliance costs.”

© Scoop Media

 
 
 
 
 
Business Headlines | Sci-Tech Headlines

 

Scoop Business: PayPal Stops Processing Mega Payments; NZX Listing Still On

PayPal has ceased processing payments for Mega, the file storage and encryption firm looking to join the New Zealand stock market via a reverse listing of TRS Investments, amid claims it is not a legitimate cloud storage service. More>>

ALSO:

Housing Policy: Auckland Densification As Popular As Ebola, English Says

Finance Minister Bill English said calls by the Reserve Bank Governor for more densification in Auckland’s housing were “about as popular in parts of Auckland as Ebola” would be. More>>

ALSO:

Crown Accounts: NZ Government Deficit Smaller Than Expected In First Half

The New Zealand government's operating deficit was smaller than expected in the first six months of the financial year, as the consumption and corporate tax take rose ahead of forecast in December, having lagged estimates in previous months. More>>

ALSO:

Fruit & Veg Crackdown: Auckland Fruit Fly Find Under Investigation

The Ministry for Primary Industries (MPI) is investigating a find of a single male Queensland fruit fly in a surveillance trap in the Auckland suburb of Grey Lynn... MPI has placed legal controls on the movement of fruit and some vegetables outside of a defined circular area which extends 1.5km from where the fly was trapped in Grey Lynn. More>>

ALSO:

Scoop Business: Westpac NZ Reaches $2.97M Swaps Settlement

Westpac Banking Corp’s New Zealand unit has agreed to pay $2.97 million in a settlement with the Commerce Commission over the way the bank sold interest rate swaps to farmers between 2005 and 2012. More>>

ALSO:

Get More From Scoop

 
 
Standards New Zealand

Standards New Zealand
 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news