ATTIA provided its submission to New Zealand’s Parliamentary Finance & Expenditure Committee (November 1, 2022), regarding the Inland Revenue Department’s plan to levy the Goods & Services Tax (GST) on all short-term rental bookings. In our view, the move would be problematic as STRA platforms already pay GST to the IRD for the earnings they make in New Zealand.
ATTIA has studied the Inland Revenue Department’s (IRD) proposal to require short-term rental accommodation (STRA) platforms to levy the Goods and Services Tax (GST) on all bookings from 1 April 2024, through amendments to the GST Act 1985.
We understand that the Taxation (Annual Rates for 2022–23, Platform Economy, and Remedial Matters) Bill broadly implements the changes consulted upon in April 2022. We view it as the IRD’s attempt to ensure that tax laws remain ‘fit-for-purpose’ amidst the increasing prominence of ‘sharing economy’ platforms. The IRD’s adoption of the OECD’s ‘Model Rules for Reporting by Platform Operators’ could potentially be a positive development for global platform regulation harmonization, if implemented with tax compliance in mind.
However, we are gravely concerned with the proposed GST imposition on STRA bookings. We emphasize that STRAs are not in themselves accommodation providers, and merely function as platforms to connect hosts and visitors. It follows that the onus should fall on hosts, rather than platforms, to collect and pay any relevant taxes. Crucially, STRA platforms already pay GST to the IRD for the earnings they make in New Zealand.
We also hold doubts over whether GST imposition would be a proportionate intervention to the supposed tax base erosion introduced by the STRA industry, which has thus far not been sufficiently quantified. We argue that the OECD Model Rules should be implemented first, to better understand the true scale of the taxation issue before any potential GST imposition.
Additionally, we recommend that the IRD first observe developments in the European Union regarding OECD Pillar 1, before considering any further GST imposition domestically.
Given New Zealand’s ambitions to reinvigorate its tourism industry following the COVID-19 pandemic, we believe that the proposed amendments to the GST Act 1985 would hurt STRA platforms and hosts badly, during an especially crucial phase of travel recovery. ATTIA’s members are keen to facilitate New Zealand’s return as a global tourism and business destination, and are prepared to share their perspectives which have served other markets well.