New Zealand has made changes to its tax laws.
This month onward, every company around the world making more than sixty thousand NZD and supplying remote services to New Zealand (whether it’s movies, games webinars, insurance, web design or legal council) will have to start paying tax to the New Zealand government. Check out part one if you’re wondering why.
The tax is intended for big companies like Netflix that offer cheaper services (when compared to local services) because they don’t have any tax to pay. But the ‘Netflix tax’ is going to affect the little guys too; small companies in America or Canada or Sweden that are not making a quarter as much as Netflix but still have to register for and pay GST.
These companies are caught between a rock and a hard place - the government on one side and juggernauts like Netflix and Steam on the other; I’m going to go into how their businesses are changing.
I caught up with Marita Vasquez last week to talk about how her business is going to be developing in light of the new tax laws.
We’d conversed over emails a few days before the interview, she told me she provided ‘home cooking webinars to customers around the globe’. A perfect example, I thought, of a business that might be affected by New Zealand’s new tax laws.
The interview didn’t go exactly as I had planned. Five minutes into our conversation preceding the recording, Marita told me she (webinars and all) was vegan. I had to balance two opposing forces for the rest of our appointment - one, admittedly stronger, compelling me to satirize her beliefs and another reminding me that I’d started out trying to do a job.
Here’s a snippet of our interview, as it was recorded. There’s very little guilt on my part because Marita proved quite the match for me, I’m convinced she comes out the better. Not to mention that our banter proved to be a blessing in disguise - helping mask the fact that this is yet another tax article that I’m writing. (Sigh)
Moses: Marita, thanks for joining us. Is being a Vegan more difficult than being Amish? [Is this just me?]
Marita: Tha… What?
Moses: Vegan and Amish? Is the connection only in my head? I’m sorry. For some reason, it just won’t go away. Tell us about your business.
Marita: Um. Thanks for getting to the point. I run digital courses and webinars online for vegans around the world. It’s called “Home Cooking with Marita”.
Moses: Are your parents customers?
Marita: [Laughs] Yes, I -
Moses: I meant, are your parents your only customers?
Marita: You’d be lucky if they’re your only listeners.
Moses: [See? Snarky, right?] Hey, there’s no reason to be mean. And. This is a blog, I’m going to be transcribing this.
Marita: Veganism is a growing global movement. It’s small, but it’s growing. People are waking up to the fact that we just can’t kill animals for their meat, skin and milk. It’s cruel.
I have customers all over the world.
Moses: Where would you say you have the most customers? Other than here in San Francisco? [Notice my flailing attempt to get the conversation back on track. I’m a consummate professional, if nothing else]
Marita: I have quite a few customers in London and Saudi Arabia (surprisingly). China’s been pretty unresponsive, for dog knows what reason. I really made it in New Zealand after my class on homemade marmite and kiwis.
Moses: You’re talking about the fruit, right? [This one’s on me. She walked right into it]
Marita: […]
Moses: It’s funny that you should mention New Zealand. There are eight sheep for every person in New Zealand. You really think it’s a good place to be promoting veganism?
Marita: It looks like there are eight sheep in your person.
Moses: [I deserved that. Sigh. I deserved that] New Zealand’s changing its tax laws this October. But the change won’t apply to you. There’s no way a vegan company can be making more than $60, 000 NZD.
Marita: Actually, I am. I’m registering for New Zealand’s GST next week. My business hit 120,000 US dollars last quarter.
Moses: Is there a lot of red tape to maneuver around?
Marita: Actually there is. Apart from registering, my prices have changed. My courses are a little more expensive now. I’m hoping my customers will stick with me.
Moses: How are you going to register for GST with your whole no technology thing? How will you be able to get to a computer or a phone?
Marita: Amish. Vegan. Separate. Different.
Moses: I did it again. Damn.
Marita: It’s amazing that you got your head around GST. Must have been difficult, you’re quite a stupid man.
Moses: Uhm. Some...protein joke...[Not my wittiest retort, I’ll admit]
Marita: Wow, someone call SNL.
Moses: GST calls for verifying your customer’s location. How will you make sure your customers are from New Zealand?
Marita: I collect their billing addresses. I also know the IP addresses of the devices they are using. There’s also the bank details and the mobile country codes.
Moses: And how will you make sure they’re actually vegan? Is there a PETA certificate you can collect? [Bet she didn’t expect a legitimate tax question to be a set-up for that] Marita: Yeah, this is over.
After profusely apologising to Marita, we talked about her business some more. She’s not happy with the extra hassle but doesn’t find the process of registering for and paying GST too complicated at all (I double dare anyone selling in the US to find NZ’s tax laws complicated). And she certainly sees the need for it - ‘the only reason people in New Zealand should be coming to me for my webinars over going to someone local’ she affirms ‘is because I have a better course, not because I’m exploiting an unfair institutional advantage’ (she’s pretty cool, for a vegan).
Do you have to register for GST? Are your prices changing? Drop me a line, tell me your story. As long as you're not Vegan or Amish, I think we’ll be able to get along.