Story image

Digital tax, multinational tax crackdown closer

21 May 15

Taxes on services purchased online from offshore sellers looks to have moved a step closer today, with Budget 2015 confirming it is a key focus area on the tax policy work programme.

Low-value goods purchased online will also be looked at.

Last week the Australian Government flagged that it will ‘close the GST loophole’ and level the playing field by including GST on all digital goods and services from overseas from July 2017.

Australia’s 10% tax, dubbed the Netflix tax, will apply to e-books, games, movies, music, consultancy and legal services, among others.

Similar laws exist in other OECD countries.

Eugen Trombitas, PwC partner and GST specialist, says New Zealand can’t ignore the issue any longer, with the digital economy having a ‘profound’ impact on GST.

“Making up around 30% of the Government’s tax take, GST is a tax on consumption and when this consumption is taking place in New Zealand, GST should be charged.

“New Zealand retailers and businesses have been insisting on a level playing field and there’s a danger we could fall behind the international pace and best practice if nothing is done soon.”

Also signalled was a tightening of multinational taxation arrangements, which was quickly applauded by Spark New Zealand managing director, Simon Moutter.

"Multinational taxation arrangements are costing New Zealand hundreds of millions every year in lost taxation revenues, so it's encouraging to see the Government identifying this issue as a key focus for tax policy work," Moutter says.

He says many large multinational companies, especially 'weightless' businesses operating in the digital sector are 'exploiting' the differences between tax jurisdictions to pay minimal tax in many countries where they do business.

"Every tax dollar these digital companies avoid paying in New Zealand has to be made up by New Zealand taxpayers," Moutter notes.

LogicMonitor launches container monitoring solutions
Kubernetes monitoring and LM Service Insight provide performance analytics and data retention for microservices and containerised applications.
Commvault fully integrates backup with Cisco Hyperflex
Its IntelliSnap technology has been validated to work with Cisco HyperFlex hyper-converged systems without the need for third-party tools.
Experts comment on record 772mil-user data breach
Dubbed “Collection #1”, the data set contains emails and passwords with over a billion unique combinations of email addresses and passwords.
McAfee Gartner Customers’ Choice for Secure Web Gateway
“We take great pride in being recognised by our customers on Gartner Peer Insights, and their willingness to recommend McAfee Web Gateway technology”
Lenovo invests in ePaper company in bid to revive tablets
As the tablet market declines, Lenovo is making an investment in CLEARlink in order to create a low-power, colour, outdoor-ready display.
OutSystems three APAC Partners of the Year
Of the seven companies named in the OutSystems recent partner awards, three have a strong APAC presence.
Hands-on review: Nvidia GeForce RTX 2080 Ti FE
The lack of games taking advantage of the GeForce RTX 2080 Ti makes reviewing the card rather challenging
IDC: NZ IT services market will near $4B in 2023
As cloud adoption grows with every company seeking the competitive advantage it can provide, the opportunities in IT services are expanding in kind.