The NZ GST Act inadequately deals with online supplies of services and should be fixed immediately.
I’m referring to how the Act treats those selling products online such as e-books, movies, professional advice, teaching materials, photographs and lots of other digital information.
For businesses selling directly to private consumers the issues are more significant.
In certain situations the legislation requires the supplier to determine where their sales are “physically performed”. This affects how GST applies to them.
The concept of “physical performance” does not sit well with how these products are delivered. Is it the place where the supplier is located, where a server in the delivery chain is located, where the consumer is when they download the relevant product, where the consumer resides or some other place? Is there any “physical performance” at all?
I know these issues are being looked at and no doubt we’ll see some reform at some stage.
However, businesses are having to work out how the law applies to them now and it’s just not clear at all.
Barrister, Director and Consultant specialising in tax, family enterprise governance and succession, helping start ups and entrepreneurial enterprises grow safely and international expert on value added tax policy and implementation.