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Topic # 195137 7-Apr-2016 13:23
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Just read that this is likely to become law shortly.

What I can't quite see is how it can be enforced.

If a foreign company sells an intangible product downloaded from a server outside NZ, how on earth can the NZ government force them to pay taxes on that sale?





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  Reply # 1527638 7-Apr-2016 13:41
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how on earth can the NZ government force them to pay taxes on that sale? 

 

Because all a government has to do is to pass laws?

 

The rationale is if you imported a DVD through Amazon you would have to pay GST, so why not virtual products?


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  Reply # 1527643 7-Apr-2016 13:52
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So with a $25,000 tax avoidance penalty (to end user) if you don't pay a tax due, how will this work for Netflix US customers here? (Unblocked)

First I thought, how would they charge me for my USA Netflix account paid in US dollars, then came to the penalty notice and thought ... Hmmmm...

http://m.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11499034

 
 
 
 


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  Reply # 1527644 7-Apr-2016 13:53
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Pretty much all services are intangible products and the Government manages to tax them quite well with GST.

 

To be honest I'm surprised it's not covered already under the GST.
I'm paying NZ dollars for a service provided in NZ when I watch Netflix.
It just happens to be imported direct to me from overseas

 

The fact that GST does not apply already sounds like a loophole to me.


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  Reply # 1527646 7-Apr-2016 13:56
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how on earth can the NZ government force them to pay taxes on that sale? 

 

Because most of the time, large global companies comply with the laws of companies they operate in....

 

Being on side with the biggest bully in the playground (the Govt) is usually deemed by a compnay to be in its best interest....


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  Reply # 1527672 7-Apr-2016 14:01
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Only really affects me as a Steam buyer, and I'll simply stop buying direct from Steam and go back to using CD key sites.

 

Why can politicians never seem to understand that the internet is not theirs to control.

 

 





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  Reply # 1527673 7-Apr-2016 14:03
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It won't need to be enforced.
Netflix (and Amazon and similar large companies) will comply because it would be dumb not to.
Small businesses will get away with it, but only amount for a tiny proportion of transactions anyway, so the govt won't bother enforcing it.

Much like how GST works on physical imports today. In theory, *all* physical imports should attract GST. However practically speaking enforcing it on very small purchases is not cost effective so they don't do it. That's why they have a threshold now.

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  Reply # 1527674 7-Apr-2016 14:04
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Lias: Why can politicians never seem to understand that the internet is not theirs to control. 

 

The taxman doesn't give two hoots about the internet, it's a financial transaction that can be skimmed.


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  Reply # 1527681 7-Apr-2016 14:12
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KrazyKid:

 

Pretty much all services are intangible products and the Government manages to tax them quite well with GST.

 

To be honest I'm surprised it's not covered already under the GST.
I'm paying NZ dollars for a service provided in NZ when I watch Netflix.
It just happens to be imported direct to me from overseas

 

The fact that GST does not apply already sounds like a loophole to me.

 

 

A massive number of tangible products are "downloaded" from overseas. Onto trucks, planes, instead of the internet. When that law was made there was probably no known internet, and certainly no knowledge of what it will become. Goods and services sold in NZ, thats pretty much it. 


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  Reply # 1527695 7-Apr-2016 14:16
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Somewhat related:

 

https://www.youtube.com/watch?v=WbiacSD13qk





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  Reply # 1527702 7-Apr-2016 14:32
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Well, now that they've got that under control, they won't need to bother with offshore trusts anymore. Sorted! #PanamaPapers





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  Reply # 1527704 7-Apr-2016 14:37
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wellygary:

 

how on earth can the NZ government force them to pay taxes on that sale? 

 

Because most of the time, large global companies comply with the laws of companies they operate in....

 

Being on side with the biggest bully in the playground (the Govt) is usually deemed by a compnay to be in its best interest....

 

 

 

 

If they were based in NZ, or the servers were, I would agree.

 

If neither is the case and they are in, say, Lithuania, I can't really see how the IRD could do a lot about it if the company just said "no" unless they were planning on blocking NZ consumer access to those companies via the internet, which would be unpopular I suspect.






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  Reply # 1527708 7-Apr-2016 14:45
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Geektastic:

 

 

 

If neither is the case and they are in, say, Lithuania, I can't really see how the IRD could do a lot about it if the company just said "no" unless they were planning on blocking NZ consumer access to those companies via the internet, which would be unpopular I suspect.

 

 

 

 

I don't think 'popularity' is high on the agenda. It's a tax that affects ordinary people far more than rich people, so they won't really care.





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  Reply # 1527711 7-Apr-2016 14:52
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I'm surprised they haven't waited for another natural disaster to rush in some new laws...


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  Reply # 1527782 7-Apr-2016 16:56
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roobarb:

 

The taxman doesn't give two hoots about the internet, it's a financial transaction that skimmed.

 

 

Then why are they so reluctant to introduce a financial transaction tax system? Oh wait, that would tax the rich, can't be having that :-P





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  Reply # 1527853 7-Apr-2016 18:33
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Geektastic: Just read that this is likely to become law shortly.

What I can't quite see is how it can be enforced.

If a foreign company sells an intangible product downloaded from a server outside NZ, how on earth can the NZ government force them to pay taxes on that sale?

 

Easy if they look at your method of payment and where the money went and send you a bill for the tax. Bitcoin might be the only exception. Pretty much everything else is nailed down tight these days. 

 

Credit card transactions can be easily monitored and assessed for tax. You'd likely then have to prove you didn't buy anything taxable.

 

They'd probably have a $25 charge for appealing. You know how this goes. We already know they watch every transaction. Just try sending money to the Ukraine by ANY means (other than Bitcoin or cash courier)

 

 

 

 

 

 





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