Spark cries foul over Netflix GST dodge

Spark New Zealand isn't happy after it reported Netflix would not charge GST on the New Zealand version of its service, which launches next Thursday.

US-based Netflix is taking on similar local offerings from Sky Television and Spark to secure the best programming for their streaming services in what is now a highly competitive market as the companies look to win over consumers. However, under New Zealand law, because ithe company is based offshore, it is not required to charge GST. By not charging GST, Netflix already has a cost advantage over Lightbox and Neon.

"There are no local or federal rules requiring companies not based in New Zealand to collect GST on digital purchases," the company said in a statement.

Richard Llewellyn, head of corporate communications for Spark, says, "From our perspective, if it's true (that Netflix ANZ are not intending to pay GST), this is yet another example of the lack of a level playing field for digital services.

"Lightbox was set up as a NZ company, playing by NZ rules and paying its fair share of NZ tax – and we think others like Netflix NZ who are promoting themselves as a company selling services, in New Zealand, to New Zealanders, should do the same," he says.

Llewellyn says the issue is not about whether or not there should be GST levied on goods and services bought online from offshore providers. "This is a situation where Netflix have announced that they are 'coming to NZ', buying content from overseas studios for the New Zealand market, and selling this service to New Zealanders," he says.

"This is exactly the same situation as Lightbox, so we can't understand why Netflix ANZ thinks they can avoid paying their fair share of tax.

"Netflix ANZ are effectively setting up in NZ with a local website, social marketing, local relationships, and paying to advertise to local consumers," says Llewellyn.

"To all intents and purposes they are a local operation but constructing their affairs to avoid paying tax here.