Data First – Tax Next: How Fiji’s Technology Can Improve New Zealand’s 'Netflix Tax' (Part 1)

94 Tax Notes International 159, 2019

24 Pages Posted: 16 May 2020

See all articles by Richard Thompson Ainsworth

Richard Thompson Ainsworth

NYU - Graduate Tax Program; Boston University - School of Law

Date Written: 2019


Over the past decade the VAT in the South Pacific has been changing. More change is coming. Change is needed in both the larger economies (Australia and New Zealand) and the smaller ones (the Pacific Island Countries or PICs). The changes we see currently are propelled by cross-border remote sales of services and low-value goods.

The government response in the South Pacific is not uniform. The larger economies have relied on statutory remedies; the smaller economies are turning to technology. The larger economies are crafting complex, extra-territorial compliance provisions targeting remote sellers. The smaller economies are mandating secure digital invoices, real-time reporting, with mechanisms for proof of audit, that is setting the stage for a B2C reverse charge mechanism, and later adoption of a block-chain-based information exchange.

Press attention is being drawn to the larger economies through catchy newspaper headlines. There is the “Netflix Tax” (for rules directed at cross-border supplies of services) and the “Amazon Tax” (for rules directed at cross-border supplies of low-value goods).

Technologists are approaching remote sellers differently than are statutory draftsmen. In a residential VAT a technologist will focus on improving domestic (residential) compliance. No new extra-territorial tax (requiring non-residents to help collect and remit it) is added. Instead, there is simply a push for more granular data and an effort to capture each taxable transaction in real-time. Technologists are digitally preserving the supply chain. Each step is recorded so that the receipt of cross-border services, or the purchase of even the smallest-valued goods can be minutely identified and subjected to tax under existing rules.

An additional level of enforcement may be needed. It too will be technology-based, and should borrow from the Brazilian prioritizing of digital over paper records known as SPED (Sistema Publico de Escrituracao Digital or the Public System for Digital Accounting). SPED, or something similar, is undoubtedly part of the trajectory of Fiji’s digital reform. It should be part of New Zealand’s “Netflix Tax.”

Considered narrowly, this series of four papers is a specific proposal that New Zealand’s “Netflix Tax” should be reconfigured and strengthened with the technological vision that is embedded in Fiji’s VAT reform.

Considered more broadly, this is a multi-part comparative study of the way a “Netflix Tax” should be adopted. It starts with New Zealand’s reform, a statutory fix to the current problem, and then considers how New Zealand could benefit from Fiji’s technology. It suggests that if Fiji’s technological fix to the remote services problem had been considered by New Zealand, then the “Netflix Tax” would be simpler to administer, and the remote services transactions would be far easier to audit.

But this collection of four papers goes further. They also indicate that New Zealand, or any jurisdiction that follows this path, should very quickly be able to craft a digital B2C reverse charge mechanism. The potential to do so is inherent in the full development of Fiji’s technology. In addition, such a jurisdiction should be ready to migrate to a multi-jurisdictional block-chain where a real-time information exchange is possible. Such a block-chain is the next very necessary step in modern cross-border VAT administration.

Keywords: Value Added Tax, VAT, Pacific Island Countries, PICs, B2C Reverse Charge, Proof of Audit, Block-Chain Information Exchange, Netflix Tax, Amazon Tax, SPED, Brazil, Fiji, VAT Monitoring System, VMS, New Zealand, IMF, Digital Invoice, Fiscal Invoice

Suggested Citation

Ainsworth, Richard Thompson, Data First – Tax Next: How Fiji’s Technology Can Improve New Zealand’s 'Netflix Tax' (Part 1) (2019). 94 Tax Notes International 159, 2019, Available at SSRN:

Richard Thompson Ainsworth (Contact Author)

NYU - Graduate Tax Program ( email )

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Boston University - School of Law ( email )

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