Netflix has agreed to apply sales tax in New Zealand.

This follows a government announcement that it will require foreign companies to collect goods and services tax (GST) on sales of services to NZ consumers, meaning Netflix subscriptions, iTunes downloads and e-books downloaded from Amazon should see an increase in price.

A discussion paper released by Revenue Minister, Todd McClay, said most foreign firms will “do the right thing”, pointing to the success other countries such as South Africa, Switzerland and Norway have had introducing similar regimes.

Netflix said in a statement that it “has been and will be compliant with all applicable laws and regulations, and pays taxes as required under local and national law”.

Charging GST on TV, music and online services looks to be much easier than collecting GST on low-value items such as books, shoes and clothes coming across the border judging by government’s first discussion document on applying GST to e-commerce purchases.

Currently McClay is seeking public submissions by September 25 on proposals that will seek to apply GST to approximately $40 million a year of online purchases of digital content such as videos and music from services such as Netflix and iTunes.