Netflix hikes prices following GST change

Steaming service Netflix is hiking prices in order to compensate for a new requirement that it levy GST in New Zealand.

The so-called “Netflix tax” came into effect on Saturday.

Physical goods bought online already incur a GST charge, but the new tax will affect things like streaming services, e-books, music and video downloads.

The price of a Netflix standard streaming service will increase from $12.99 a month to $14.99.

An email sent to a customer said the change would apply from the next billing date, on November 1.

The monthly charge for the premium service will rise from $15.99 to $18.49, while the non-HD basic service will increase from $9.99 to $11.49.

“Members will be notified of the change via both e-mail as well as an in-product notification, 30 days before they are impacted,” a Netflix spokesman said.

Under previous law, the Government was missing out on $180 million a year by not collecting GST on online purchases, including $40 million from shopping on iTunes, Netflix, Spotify and other online services.

Deloitte tax specialist Allan Bullot said last week that the change was a good one for New Zealand and would bring this country up to speed with the rest of the world.

“That’s something where back in 1986 when [GST] came in, no one would have dreamed that you would be walking around with a phone in your pocket that you could download songs and movies on,” Bullot said.

“If you had a walkman back then you were cool – so it’s just a different world.”

Bullot said the tax would mostly affect larger companies because the threshold was $60,000.

He said this meant micro-suppliers of remote services wouldn’t be caught up but a small number of larger players would be forced to register to charge GST to New Zealand consumers.

The introduction of the Netflix tax coincided with the 30 year anniversary of GST tax in New Zealand.

NZ Herald