More than 80 offshore suppliers of remote services have registered for goods and services tax since the government widened its net to apply GST to cross-border services such as streaming video, e-books, music, and software on Oct. 1, says Revenue Minister Michael Woodhouse.
The so-called Netflix tax was passed into law in May and captures payments for services such as iTunes downloads and Steam video games. Woodhouse told the Chartered Accountants Australia and New Zealand annual conference today that the tax was in keeping with the nation's broad base, low rate (BBLR) tax policy framework.
He outlined the government's tax policy work programme priorities through to the end of 2017, which include developing an exclusion from dividend taxation rules for certain demergers by Australian listed companies. The change is designed to prevent demerged assets being treated as taxable income when no distribution has been made.
"I have asked that this item be fast-tracked and officials will consult with stakeholders on the detail of the proposed amendment before its introduction in the tax bill scheduled for introduction early next year," he said. That bill will also fix an "overreach" issue related to the application of the voting interest test for corporate trustees, an issue that affected professional firms such as accountants acting as independent trustees for their clients' companies, he said.
In terms of international tax avoidance, Woodhouse said New Zealand had some work to do in terms of the OECD's BEPS Action Plan recommendations. They included New Zealand's transfer pricing legislation, which was no longer fit for purpose after 21 years.
He said New Zealand's thin capitalisation rules limit the amount of debt foreign-owned firms can have in New Zealand but there was room for improvement.
"A small number of foreign-owned firms appear able to take excessively high ihigh-interesttions. For example, the interest rates on some related-party loans appear to be unreasonably high," he said.
"We are therefore considering measures that would bolster our rules, to ensure that foreign-owned firms cannot shift excessive profits out of New Zealand using debt," he said.
New Zealand is among 96 countries that are working on a multilateral tax treaty developed by the OECD to tackle tax avoidance strategies used by multinational companies that are known by the acronym for base erosion and profit shifting (BEPS).