Government expected to move on 'Netflix tax'

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253 posts

Ultimate Geek

#1429686 17-Nov-2015 14:41

Would Unotelly itself be subject to GST?

davidcole

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#1429688 17-Nov-2015 14:52

bongojona: Would Unotelly itself be subject to GST?

Interesting question. They're not providing the service ie netflix, but are still providing you as a user a service that you should be paying gst on. But who knows how that could be tracked.

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NonprayingMantis

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#1429702 17-Nov-2015 15:08

Here's how I expect it to work:

Government will ask large organisations with substantial digital sales into NZ to start collecting GST - the likes of Netflix, iTunes, Amazon (for e-books)

They will comply (just like theyhave complied when other countries have implemented similar regimes) and if you have an NZ-based account with those companies, you will see GST applied to your pricing.

If you buy electronic products from other companies, (like Unotelly) or have a non-NZ based account (e.g. US Netflix) then you will not see GST applied to them.
Now, you probably SHOULD voluntarily pay GST, but realistically, there is no way for the govt to track it properly, so they won't bother. (in the same way you should pay GST on all physical goods you import, but the govt don't bother collecting it below $400, and don't bother policing it either)

In other words. As a consumer you probably don't need to do anything, and even though you might be 'avoiding' GST (intentionally or unintentionally), the government is not going to crack down on you for the sake of $2/month.

shk292

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#1429707 17-Nov-2015 15:12

rmt38:
littleheaven: Yeah, I'll probably just cancel my US Netflix and get an NZ one so I can pay the GST and avoid any potential hassle. Although the fact I signed up for it before Netflix was available in NZ should be reasonable evidence that it was for content not GST avoidance.

How comparable is the content in Netflix NZ to Netflix USA? I took a look at Netflix NZ content listing, and it looked pretty limited.

About as comparable as chalk and cheese

Have a look at filmefy.com or lemontv; you can see what is available in what countries and then, using Unotelly etc, you can switch region to get the most out of the service

mattwnz

20165 posts

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#1429711 17-Nov-2015 15:17

littleheaven: Yeah, I'll probably just cancel my US Netflix and get an NZ one so I can pay the GST and avoid any potential hassle. Although the fact I signed up for it before Netflix was available in NZ should be reasonable evidence that it was for content not GST avoidance.

But people would only be getting the US version of Netflix, for the better content, not that they want to avoid paying GST. Do you know if you can still keep the US version, but mail a cheque for the GST to the IRD, so they are not losing the tax? I have only got lightbox myself, which is already charging GST, so this new law certainly benefits them a lot.

mattwnz

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#1429712 17-Nov-2015 15:19

NonprayingMantis: Here's how I expect it to work:

Government will ask large organisations with substantial digital sales into NZ to start collecting GST - the likes of Netflix, iTunes, Amazon (for e-books)

Isn't it only 50k in sales in sales to NZ, which is tiny, as that wouldn't even pay the wages of one staff.

shk292

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#1429716 17-Nov-2015 15:25

mattwnz:
littleheaven: Yeah, I'll probably just cancel my US Netflix and get an NZ one so I can pay the GST and avoid any potential hassle. Although the fact I signed up for it before Netflix was available in NZ should be reasonable evidence that it was for content not GST avoidance.

But people would only be getting the US version of Netflix, for the better content, not that they want to avoid paying GST. Do you know if you can still keep the US version, but mail a cheque for the GST to the IRD, so they are not losing the tax? I have only got lightbox myself, which is already charging GST, so this new law certainly benefits them a lot.

Yes, because having a IRD staffer handle paper cheques for a few bucks a year is really worthwhile

If you feel guilty about escaping a couple of bucks GST per month, switch to paying Netflix NZ - it makes no difference to the material you can access. Or buy a couple of extra litres of petrol per month and go for a drive. It really isn't credible or practicable for NZIRD to be chasing individual people for GST on a service like this

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ajobbins

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#1429717 17-Nov-2015 15:26

This is only going to get harder to try and enforce as we buy more and more digital goods from overseas. Only the big players MIGHT comply, but they're not really under any obligation too unless they have a business presence in NZ.

We should just scrap GST altogether and raise income taxes accordingly. Then we have a progressive rather than regressive tax.

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davidcole

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#1429718 17-Nov-2015 15:27

mattwnz:
littleheaven: Yeah, I'll probably just cancel my US Netflix and get an NZ one so I can pay the GST and avoid any potential hassle. Although the fact I signed up for it before Netflix was available in NZ should be reasonable evidence that it was for content not GST avoidance.

But people would only be getting the US version of Netflix, for the better content, not that they want to avoid paying GST. Do you know if you can still keep the US version, but mail a cheque for the GST to the IRD, so they are not losing the tax? I have only got lightbox myself, which is already charging GST, so this new law certainly benefits them a lot.

The catalog and the billing of netflix are now seperate. It used to be that only Overseas netflix was available to hoops were jumped through to allow payment and allow access to the overseas catalogs.

It is now possible to bill from New Zealand since they are "local" but use a DNS service or VPN to access overseas catalog.

In this case, you switch your billing to NZ but continue to use the DNS service or vpn you currently use to switch your catalog.

Technically in this instance the only thing you're not paying GST on (when it's attached to teh NZ netflix billing) is the payment to the VPN or DNS service provider.

shk292

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#1429723 17-Nov-2015 15:35

ajobbins: This is only going to get harder to try and enforce as we buy more and more digital goods from overseas. Only the big players MIGHT comply, but they're not really under any obligation too unless they have a business presence in NZ.

We should just scrap GST altogether and raise income taxes accordingly. Then we have a progressive rather than regressive tax.

But, this government wasn't elected on a socialist mandate and have very publicly stated they want to encourage earning and saving by reducing income tax wherever possible. The tax system is already very progressive with only a small portion of people paying a disproportionate slice of the overall tax pie, especially if you factor in welfare, WFF etc.

StarBlazer

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#1429726 17-Nov-2015 15:42

davidcole: It is now possible to bill from New Zealand since they are "local" but use a DNS service or VPN to access overseas catalog.

In this case, you switch your billing to NZ but continue to use the DNS service or vpn you currently use to switch your catalog.

But for how long?

Lightbox et al will be on the heels of Netflix to ensure anyone with a NZ account can only access NZ content - irrespective of DNS/VPN. You already need separate Apple IDs for each country you want to obtain apps for.

Procrastination eventually pays off.

freitasm

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Geekzone

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#1429731 17-Nov-2015 15:45

StarBlazer:
davidcole: It is now possible to bill from New Zealand since they are "local" but use a DNS service or VPN to access overseas catalog.

In this case, you switch your billing to NZ but continue to use the DNS service or vpn you currently use to switch your catalog.

But for how long?

Lightbox et al will be on the heels of Netflix to ensure anyone with a NZ account can only access NZ content - irrespective of DNS/VPN. You already need separate Apple IDs for each country you want to obtain apps for.

But then it's not a GST thing anymore, outside of this scope.

And yes, Lightbox is not in this because they think the government should get more money. They're in this because they fear the competition. There's no good in there, it's just for their own profit.

NonprayingMantis

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#1429768 17-Nov-2015 16:03

freitasm:
StarBlazer:
davidcole: It is now possible to bill from New Zealand since they are "local" but use a DNS service or VPN to access overseas catalog.

In this case, you switch your billing to NZ but continue to use the DNS service or vpn you currently use to switch your catalog.

But for how long?

Lightbox et al will be on the heels of Netflix to ensure anyone with a NZ account can only access NZ content - irrespective of DNS/VPN. You already need separate Apple IDs for each country you want to obtain apps for.

But then it's not a GST thing anymore, outside of this scope.

And yes, Lightbox is not in this because they think the government should get more money. They're in this because they fear the competition. There's no good in there, it's just for their own profit.

and it's totally reasonable to do so.

Lightbox and Netflix are priced the same for the main plan ($13). By not collecting GST, Netflix has an extra ~$1.70 per customer to spend on the cost of their business.

That may not sound like much, but when you consider they probably only spend ~$3-4 per customer on content (30% of revenue going to content is about the benchmark), that means Netflix have around 50% more budget available per customer for content vs Lightbox (i.e. if Lightbox spend ~$4 per customer on content, Netflix can spend ~$6 and still have otherwise identical margins)

50% more spend on content translates to a pretty significant competitive advantage over Lightbox - and this isn't a competitive advantage that might be seen as 'fair' because they have built something better that lightbox, (They have built something better than lightbox, but lets not confuse the issue here. We're specifically talking about the GST advantage)

It's a competitive advantage in this case gained because they simply avoid paying taxes that they should probably be paying. Netflix NZ is a service consumed in NZ, by NZers, priced in NZD, and has content designed for the NZ market. By any account of 'fairness' it should pay taxes just the same as any other similar service.

kharris

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#1429800 17-Nov-2015 17:10

davidcole:

In this case, you switch your billing to NZ but continue to use the DNS service or vpn you currently use to switch your catalog.

Technically in this instance the only thing you're not paying GST on (when it's attached to teh NZ netflix billing) is the payment to the VPN or DNS service provider.

Is it possible to "switch your billing" on a US Netflix account to NZ or do you need to cancel and create a new account under a new email address? I assume you can't cancel and then create a new account with the same email address as this would just reinstate the old US account wouldn't it?

Kirk

StarBlazer

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#1429804 17-Nov-2015 17:26

Can we have a vote?

Please +1 either of the following two statements.

EDIT: As I can't +1 my own post - I agree that we should pay GST.

Procrastination eventually pays off.

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