Otago Chamber of Commerce chief executive Dougal McGowan hopes the Government will go further in the implementation of GST on digital products, saying local retailers are on the back foot in some sectors.
''We are very pleased for retailers GST is being applied to digital products, as this is the first step leading to greater fairness and quality with overseas firms who have not had GST on services sold.''
The next step could be GST on physical purchases as now,, some items worth $400 or less, were exempt.
It was an important issue for retailers to try to create a level playing field, as direct buying from overseas meant those retailers were not paying main street rents. That made life tough for retailers with shops, he said.
Revenue Minister Todd McClay announced earlier this week the proposed measures in his new tax Bill would apply GST to cross-border ''remote'' services supplied by off shore supplies to New Zealand-resident consumers.
That would include e-books, music, videos and software purchased from offshore websites.
Deloitte Dunedin tax partner Phil Stevenson said the GST obligations were aimed at the big suppliers of digital services.
The $60,000 registration threshold was more realistic than the low thresholds proposed in other countries considering similar changes.
The threshold was in line with the registration threshold for New Zealand-based businesses.
The Inland Revenue Department was expecting only about 100 new registrations as a result of the changes.
Now, the big players were not avoiding any New Zealand GST obligations, he said.
Under existing rules, large suppliers of digital services did not have any obligation to charge and account for GST on services they supplied to New Zealand consumers, as they often did not have a physical presence in New Zealand.
The proposed changes addressed changing technology that had meant a huge rise in supply of services from offshore.
The proposed rules were designed to ensure GST was captured and to ensure the New Zealand tax base got a greater share, Mr Stevenson said.
GST would either be absorbed by the supplier or prices would increase and New Zealand consumers would bear the cost of the GST - just like traditional goods and services.
Enforcement options when dealing with offshore business were traditionally problematic, he said.
However, because the GST registration requirements were targeting larger suppliers, a high level of compliance was expected.
''This will be driven by the desire of the companies' executives to be able to state categorically their company complies with tax legislation in all the countries in which they operate.
''The increased global scrutiny on these organisations should provide the leverage needed to ensure compliance.''
The Government was still considering whether and how to levy GST on physical purchases from overseas websites.
Most physical items worth less than $400 could be imported from overseas GST-free, Mr Stevenson said.
