Online GST changes a mixed bag for Internet users

InternetNZ has analysed today's announcement regarding Goods and Services Tax (GST) treatment for online purchases, and found it to be a mixed bag for New Zealand's Internet users.

"These measures will see New Zealanders paying GST on many of their transactions online," says Jordan Carter, InternetNZ’s Chief Executive.

InternetNZ does not have a view on the policy to introduce GST for online transactions. It does believe that if this is done, it must be done in a manner that does not stifle online commerce and that is reasonably workable. InternetNZ included this advice in a submission on these proposals earlier this year.

One of the big challenges is how retailers are expected to know that a customer is from New Zealand. Internet Protocol (IP) address information is one manner that a retailer may try to use.

"We strongly advised the Government that using IP addresses as a means for implementing these measures is technically and logically flawed," says Carter.

"It's like determining where someone lives based on their city - and sometimes even less accurate than that."

However, InternetNZ is pleased that the Government has decided on an appropriate threshold for overseas Internet-based retailers before GST collection is required.

"We look forward to the Select Committee process to help improve these proposals and ensure they do not have a chilling effect on New Zealanders’ ability to shop online."

ENDS

Below is a link to our submission on online GST:

GST: Cross-border services, intangibles and goods