New Zealand considers GST on online sales to check tax erosion

It has been announced by Revenue Minister Todd McClay, who has noted that, currently, goods purchased online for value less than NZD 400 (USD 392) are exempt from tax, ibtimes.com reports. Noting that the heavy erosion of tax is taking place, McClay said clamping GST would be done fairly to cover consumers, retailers and taxpayers.

McClay said the Government is working with the Organisation for Economic Cooperation and Development (OECD) to develop the rules for taxing online sales. However, it will also consider some reforms and may act even before the OECDs conclusions are released in November 2015, reports Tax News, cited by the source.

The minister said a number of tax jurisdictions has implemented this policy to target offshore purchasing and digital downloads. Indications are that these measures are having the desired effect. So, in the interim, officials have been instructed to report on these developments and study their suitability in implementing in the New Zealand tax system.

Online retail sales in February 2015 were up by 9% compared to February 2014. Online purchases with domestic merchants in February 2015 jumped 6% on a yearly basis. The spending at international websites was up 13% against February 2014. Though growth rate has declined recently, it has still showed that online sales were double the size of sale at domestic retailers, said a press release by Bank of New Zealand, cited by the source.