NZ imposes GST for overseas online music

Top Image: NZ duo Broods

From October, New Zealand service producers as Audience, Fingertips and Jamendo Music, will finally get to compete on a level playing field against overseas competitors as iTunes, Apple Music, Deezer, Spotify, Pandora and Netflix.

Currently they have to pay a 15% good and service tax (GST) for music and video downloads, as well as e-books. But the NZ Government has brought in a new law where offshore competitors will also be hit with the tax.

It will bring New Zealand into line with Europe, South Africa, and some Asian countries. Australia will follow suit in 2017.

Revenue Minister Michael Woodhouse, who brought in the Taxation Bill (dubbed the Netflix Tax by local media), said, “Collecting GST from the growing volume of online sales across borders has been an issue of growing concern for some time, so the passing of this legislation marks a very important first step.

“Currently New Zealand providers are at an unfair disadvantage because they must apply GST to their services, whereas overseas providers do not. This creates an unfair playing field which this legislation will eliminate.”

The introduction of overseas GST was part of a larger bill to make the NZ taxation system fairer. It included the introduction of a residential land withholding tax and an information exchange of student loan borrower details with Australia so that Inland Revenue could maintain contact details with Kiwis who reside in Australia and chased up if they default on their repayments. 

According to third quarter 2015 data from the New Zealand Music Commission, sales of albums by New Zealand acts made up 12.94% (49, 887 units) of its total music market. Domestic singles were 8.56% (90, 457 units), DVDs were 4.53% (489 units) and 17.98% of radio airplay.

In 2014, New Zealand ranked 29^th biggest music market. Last year digital outgrew physical for the first time.