New Zealand Proposes Tax On E-Commerce

The New Zealand government is proposing additional taxes on imported services that could be imposed toward the end of 2002. The taxes would apply to software and other digital services provided over the Internet. If the proposals are adopted, services purchased from outside New Zealand will be subject to the goods and services tax (GST). The proposals, announced Wednesday, are currently under discussion until the end of August. The e-commerce-related provisions propose to slap the GST on any imported digital products and services supplied by overseas companies. This would include any software downloaded from the Net. The recipient business in New Zealand will have to pay the GST rather than the overseas supplier, making foreign services less attractive. There are special rules for telecommunication companies, which will not be subject to this reverse charge unless they supply services in excess of 40,000 New Zealand dollars ($16,640). Those that do - and don't have an office in New Zealand - will be required to register for New Zealand GST if they wish to continue providing services. Analysts including KPMG Consulting said Wednesday the financial services and banking industry would be most impacted by the changes.