Spark boss Moutter takes swipe at Netflix over GST loophole

Spark's Simon Moutter says Kiwis are paying more tax because of the exemption for overseas-based companies such as Netflix. Photo / Chris Loufte

Moutter calls for level playing field in TV streaming.

Spark chief executive Simon Moutter has taken a swipe at new competitor Netflix, saying the TV streaming company is taking advantage of GST loopholes to avoid paying tax, but a New Zealand tech company executive says it's a two-way street.

Moutter has written an opinion piece calling for a level playing field in the TV streaming sector, after it became apparent that Netflix, which launched in New Zealand yesterday, would not have to pay GST for its streaming service in this country.

Current New Zealand law means companies based outside the country but selling goods or services into New Zealand do not have to pay GST. The debate has heated up significantly in the past few days with the Prime Minister hinting that a law change may be needed.

Industry leaders including Moutter argue that the non-payment of GST gives some companies a competitive advantage over those based in New Zealand that have to pay GST and therefore charge consumers more for services.

"Is it fair these companies collectively extract hundreds of millions of dollars of profit each year from the New Zealand economy, yet contribute little or nothing to the funding of a civil society?" Moutter said. "And ... cause New Zealanders to pay more tax to pick up the financial slack?"

But Straker Translations chief executive Grant Straker said his company was one of a number of New Zealand-based tech companies selling overseas that benefited from tax laws in other countries where they did not have to pay GST.

"It's a two-way thing. On principle I absolutely agree with the argument that it would be fairer if everyone was paying tax but at the same time there are benefits for, say, a startup in New Zealand selling into the US not having to pay tax," Straker said.

Moutter targeted US-based Netflix specifically and said allowing similar "tax avoidance arrangements" would have a substantial negative impact on New Zealand's economy.

A Netflix representative said yesterday that its chief executive, Reed Hastings, would not be commenting on the issue, but reiterated that Netflix was compliant with all New Zealand tax laws.

"Netflix has been and will be compliant with all applicable laws and regulations, and we pay taxes as required under local and national law. There are no local or federal rules requiring companies not based in New Zealand to collect GST on digital purchases."

Straker said the issue was that the benefits New Zealand tech companies were getting did not outweigh the loss of tax collection from large companies selling into New Zealand.

"We don't have enough big companies to offset [the tax money we aren't collecting]."

Moutter said other countries were already looking to fix the problem, and hoped New Zealand would follow suit.

New Zealand Retailers Association chief executive Mark Johnston also highlighted the issue last week, estimating the Government was missing out on more than $200 million in tax annually.