On November 6, 2015, the OECD delivered the final package on VAT/GST and cross-border services, which includes suggested rules for online sales by offshore sellers to private consumers (located in another country) of internet downloads, e-books, apps, music, videos and other digital products.
It includes suggested return filing and tax collection mechanisms to ensure effective collection of VAT/GST from foreign sellers.
The OECD has specifically indicated the measures will level the playing field between domestic and foreign sellers and protect the VAT/GST revenue.
Following the August 2015 discussion document on New Zealand GST and cross-border services it is expected that NZ will shortly introduce draft law that will closely follow the OECD guidelines. The key to this measure being successful globally is for countries to implement similar rules and implementation procedures.
Eugen Trombitas, PwC partner and GST specialist, says, “The OECD has just released the final guidelines on VAT/GST and cross-border services and digital downloads purchased by private consumers. This is a significant step because it will help ensure that consumption taxes are paid in the country where the service is consumed and provide practical guidelines that will allow a coordinated approach internationally. This also paves the way for NZ to introduce GST law to tax offshore sellers of services to private NZ consumers.”
Nerine Zoio: email@example.com