The GST-free party may be over for online services such as Spotify.

Consumers will have to start paying GST on services such as Netflix, music service Spotify, and games platform Steam, the Government is expected to confirm on Tuesday.

Revenue Minister Todd McClay has previously signalled the Government is likely to impose GST on imported digital products and services, which include streamed and downloaded music, television and games, and e-books.



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The Cabinet is now understood to have met to consider the proposal, which has become known colloquially as a "Netflix tax".

Overseas suppliers would be required to register with the Inland Revenue Department to pay GST on behalf of Kiwi consumers. That would mirror regimes that have been in place in countries such as Norway and South Africa.

Australian treasurer Joe Hockey confirmed in May that Australia would also start charging GST on digital imports.

New Zealand retailers have been lobbying for the Government to also abolish or slash the $400 threshold under which physical items can generally be bought from overseas websites and imported tax-free.

However, McClay has been circumspect on whether major changes to that threshold are imminent, stressing the costs and administrative difficulties involved in collecting GST on physical items sent through the post.