NZ, Australia bringing in tax laws modelled on EU VAT-MOSS

Discussions
#1

As of Oct 1st, 2016, the New Zealand (NZ) government expects sellers of digital products to charge NZ residents 15% VAT, and deliver that to the NZ government, no matter where in the world your company is based. If you implement your own payment system, you are unlikely to meet the threshold unless you are big in NZ. If you use a reseller such as FastSpring or sell via an app store, then the threshold is probably going to apply to the reseller.

“Offshore suppliers will be required to register and return GST if their supplies to New Zealand residents exceed NZD $60,000 in a 12-month period"

As of July 1st, 2017, the Australian government aims to have the same law in place. In this case, the rate is 10%. I’ve found no mention of a threshold, though.

As far as I can tell, in both countries, this only applies to B2C sales.

(I found this info on https://www.taxamo.com/).

I’m curious as to whether most sellers of digital products will blatantly ignore these laws, the way my US-based competitors ignore the EU VAT laws.

If a company doesn’t ignore the laws, it makes using a reseller ever more attractive than implementing and maintaining one’s own payment processing system.

I do see these laws as fair, from the point of view of bricks-and-mortar stores who see their overseas-based competitors undercut them. I’m surprised it has taken 20 years of e-commerce for governments to finally close these tax loopholes. However I also consider these laws to be close to impossible to enforce.

#2

In Australia I believe it’s the same rules that the locals follow. You can voluntary register at any limit but you must be registered once you’re at $AUD75k in a 12 month period. GST is 10% (technically 1/11 the sales price) and it applies to all sales (b2c and b2b). I can claim it back from the government when I do my monthly or quarterly return.

I wonder if this means that I’m supposed to withhold part of the payment if you don’t have an ABN (which every business has even if they don’t charge GST)?

#3

You quite likely are supposed to do this. But I don’t think many non-Australian online businesses would tolerate you withholding part of the payment, nor would automated online purchasing systems facilitate this. This is becoming a mess, as more countries decide that online retailers, no matter where they are located, need to charge, collect, and deliver tax payments. Roughly 200 countries in the world and each with their own tax rates, exemptions, and collection requirements.

#4

It really depends how much of an issue the ATO wants to make out of it. If they take the approach that charging GST is the sellers responsibility then it’s no risk to me. But they could do something stupid like insisting that I without hold tax and claim that what I paid you was 51% of the total value then demand that I pay them the remaining 49% tax. If that happened then I’d need to immediately stop dealing with any business that can’t provide me with an ABN.