New Zealand adds 15% GST to (some) ebooks from today

[HarryT]

Originally Posted by pwalker8

What's reasonable about expecting someone from another country to be an unpaid tax collector for you? What's reasonable about expecting an online seller to stay up to date and support the tax laws all over the world?

If you, as a retailer, choose to do business with a particular country, you have an obligation to follow the laws of that country. If you don't wish to abide by those laws, don't do business there. Nobody's forcing any company to do so.

Here in the US, online sellers are only required to collect taxes if they have a physical presence in the state where the buyer lives.

I'm aware of that, and the result is massive tax fraud, as people ignore their legal duty to pay "use tax" when they buy out-of-state. You're surely not holding that up as an example of a good taxation system, are you?

[robko]

Originally Posted by pwalker8

What's reasonable about expecting an online seller to stay up to date and support the tax laws all over the world?

.....

If it's a fair tax, then surely the New Zealand people will be over joyed to send a check to the New Zealand government for all the taxes they owe for online purchases.

So what's more reasonable: expecting a few thousand or tens of thousand companies who are set up to know about tax laws to figure it out if they want to sell to an individual in any given country or tens or hundreds of millions of individuals who know squat about tax laws to individually have to figure it out.

[fjtorres]

It's probably just me but I find it amusing to see the words "fair" or "reasonable" associated with the word "tax". Especially in view of the ethymology of the word and history of the practice.

Especially with its "censure" aspect.

[pwalker8]

Originally Posted by HarryT

If you, as a retailer, choose to do business with a particular country, you have an obligation to follow the laws of that country. If you don't wish to abide by those laws, don't do business there. Nobody's forcing any company to do so.



I'm aware of that, and the result is massive tax fraud, as people ignore their legal duty to pay "use tax" when they buy out-of-state. You're surely not holding that up as an example of a good taxation system, are you?

Point 1 - That's what's likely to happen. I use to work in the online business. Trying to keep up with the various tax laws is a nightmare, even for the big boys.

Point 2 - Actually, yes I do point to it as a example of a good taxation system. The US actually has one of the most successful tax systems around, simply because most people consider it fair and thus rarely cheat (unlike in some countries in the rest of the world where cheating is said to be the norm). Taxes are to pay for government services and most people recognize that out of jurisdiction companies are not getting any services to justify the taxation. If I were to get in a car and drive over to the next state and buy something there, then I wouldn't be expected to pay my state tax on that purchase. Why should I pay a tax on it just because I'm having it delivered rather than drive over and pick it up?

[pwalker8]

Originally Posted by robko

So what's more reasonable: expecting a few thousand or tens of thousand companies who are set up to know about tax laws to figure it out if they want to sell to an individual in any given country or tens or hundreds of millions of individuals who know squat about tax laws to individually have to figure it out.

Most individuals know the exact sales tax rate they pay since they pay it pretty much every time they make a local purchase.

[HarryT]

Originally Posted by pwalker8

If I were to get in a car and drive over to the next state and buy something there, then I wouldn't be expected to pay my state tax on that purchase. Why should I pay a tax on it just because I'm having it delivered rather than drive over and pick it up?

Because the law says that you have to? Most states have a "use tax" under which, if you buy something out of state and hence pay no sales tax, you have to pay the equivalent of what you would have paid in sales tax if the product is used or consumed in your state. This is what I was referring to when I said that there is tax evasion on a massive scale: many people fail to declare or pay use tax.

[BearMountainBooks]

Originally Posted by GeoffR

From 1 October 2016, non-resident companies selling more than $60,000 of goods and services to New Zealand consumers will be required to collect 15% GST on sales. Previously only companies resident in New Zealand were required to collect GST, although imported physical goods over $400 were taxed at the border.

GST law change for non-resident businesses supplying remote services [IRD]

'Netflix tax' to take effect from tomorrow [NZ Herald]


GST Move Good for Big Kiwi Tech Firms But Government Still Missing Out on Revenue [Booksellers NZ]

briefly checking some prices on Kobo, it appears that ebooks by small- and self-publishers have increased by exactly 15% overnight, but no change to prices of some big publishers such as Hachette, HarperCollins, and Macmillan UK who are perhaps absorbing the GST to maintain their price points.

These changes are hard on us Indies and very confusing. Some sites will tell you what the price is--versus the added taxes. Some just let you set the price and they INCLUDE the tax, so in effect, they are forcing you to absorb the cost. It's difficult to keep track of, that is for sure.

[HarryT]

Originally Posted by BearMountainBooks

These changes are hard on us Indies and very confusing.

How many independent authors do you think sell more than NZ$60,000 (about US$43,000) worth of books to New Zealand in a year? I suspect the number is very small. Probably zero.

[BearMountainBooks]

Originally Posted by HarryT

How many independent authors do you think sell more than NZ$60,000 (about US$43,000) worth of books to New Zealand in a year? I suspect the number is very small. Probably zero.

The way it works for us, though, is that if we sell through Kobo or Amazon, we are taxed if they sell that much. I know Amazon pays the taxes for sure (they are one that says: set the price to this and this much of it is tax. It is shown for each country). I assume the same is true of Kobo--if I sell via kobo, the company total is the one to worry about, not my earnings. Smashwords sent out notices long ago about taxes and we have to choose whether we want the tax on TOP of the price we set or absorbed. They don't allow different choices for different companies. (Which is fine with me--makes it much easier to decide. Some countries have very high taxes on ebooks--20 percent or more).

It's also difficult because some companies require that we end all prices to all countries in .99. Then there are exchange rates to keep track of and fees for exchanges. As a business, all of that has to be kept in mind when setting prices.

[fjtorres]

Originally Posted by BearMountainBooks

The way it works for us, though, is that if we sell through Kobo or Amazon, we are taxed if they sell that much. I know Amazon pays the taxes for sure (they are one that says: set the price to this and this much of it is tax. It is shown for each country). I assume the same is true of Kobo--if I sell via kobo, the company total is the one to worry about, not my earnings. Smashwords sent out notices long ago about taxes and we have to choose whether we want the tax on TOP of the price we set or absorbed. They don't allow different choices for different companies. (Which is fine with me--makes it much easier to decide. Some countries have very high taxes on ebooks--20 percent or more).

It's also difficult because some companies require that we end all prices to all countries in .99. Then there are exchange rates to keep track of and fees for exchanges. As a business, all of that has to be kept in mind when setting prices.

Correct.

Tax collection laws apply to the vendor of record not the supplier.
So indies are immediately impacted, from the first (unit of currency), as we saw with the EU VAT-grab.

[HarryT]

Originally Posted by BearMountainBooks

The way it works for us, though, is that if we sell through Kobo or Amazon, we are taxed if they sell that much. I know Amazon pays the taxes for sure (they are one that says: set the price to this and this much of it is tax. It is shown for each country). I assume the same is true of Kobo--if I sell via kobo, the company total is the one to worry about, not my earnings. Smashwords sent out notices long ago about taxes and we have to choose whether we want the tax on TOP of the price we set or absorbed. They don't allow different choices for different companies. (Which is fine with me--makes it much easier to decide. Some countries have very high taxes on ebooks--20 percent or more).

It's also difficult because some companies require that we end all prices to all countries in .99. Then there are exchange rates to keep track of and fees for exchanges. As a business, all of that has to be kept in mind when setting prices.

You already have dozens of different VAT rates within EU countries alone, though. Does one more change of tax rate really make that much difference to you?

[BearMountainBooks]

Originally Posted by HarryT

You already have dozens of different VAT rates within EU countries alone, though. Does one more change of tax rate really make that much difference to you?

It's just one more to keep track of. Specifically, I have to go check the prices on all the international selling sites to see if I need to change anything. With some sites, I do this at least monthly anyway because of the exchange rate. It's not a huge deal, but they all add up when it comes to keeping track of details.

[HarryT]

I appreciate that but, as you say, you need to check your exchange rates regularly anyway. The value of the NZ$ has fluctuated considerably against the US$ over the last few years.

[BearMountainBooks]

Originally Posted by HarryT

I appreciate that but, as you say, you need to check your exchange rates regularly anyway. The value of the NZ$ has fluctuated considerably against the US$ over the last few years.

Yes. And I have to watch prices to note whether various retailers are adding the tax on top of the price or not. (Amazon doesn't, Kobo does, Smashwords is supposed to add it on top, no idea what Google does but they mess with prices all the time anyway, etc). The real loser is the consumer. THat's a hefty tax to pay on a book.

[HarryT]

Originally Posted by BearMountainBooks

Yes. And I have to watch prices to note whether various retailers are adding the tax on top of the price or not. (Amazon doesn't, Kobo does, Smashwords is supposed to add it on top, no idea what Google does but they mess with prices all the time anyway, etc). The real loser is the consumer. THat's a hefty tax to pay on a book.

I guess that as someone used to paying 20% VAT on ebooks, it seems pretty normal to me. But yes, I agree that a 15% price hike is significant.