Further details of the New Zealand point of consumption charges (POCC) have just been released.1 From 1 August 2021, offshore betting operators will be required to pay POCC in relation to betting services provided to customers located in New Zealand.
The POCC applies to bets taken by offshore betting operators (Operators) on racing and sporting events from persons in New Zealand. The charge applies regardless of whether the event is held in or outside New Zealand. The POCC does not apply to online gambling operators who do not provide racing or sports betting services, and does not apply to online casino services.
The POCC was introduced in New Zealand by the Racing Industry Act 2020 (the Act).2
What is the rate of POCC?
The POCC will be charged at a rate of 10 per cent of an Operators’ Gross Betting Revenue (GBR).3 GBR is calculated according to the following formula:
(Total amount of money received by the Operator from taking bets from NZ residents) – (Total amount of all prizes paid or payable to persons resident in NZ)
In calculating GBR, the Department of Internal Affairs (DIA) advises that4:
- refunds on bets (e.g. due to scratchings) can be deducted from amounts received by the Operator;
- bonus bets will be included in the GBR calculation, but only to the extent of any “net-winnings” derived from the bonus bet; and
- lay off bets will not be taken into account.
Operators must pay consumption charges for each period of 3 months (the return period). Returns must be paid within 28 days after the end of the return period. Operators must also file a return with the DIA setting out the amount of consumption charges (converted to New Zealand dollars) that they are required to pay in the relevant return period. Penalties apply for failure to pay consumption charges for the return period on or before the due date.
The first return period for the POCC is from 1 August 2021 to 30 September 2021. As such, first payments of the POCC will be due by 28 October 2021. Going forward, returns will be required to be lodged for each quarter ending 31 March, 30 June, 30 September and 31 December each year.
Who is obliged to pay?
The POCC applies to bets “from persons resident in New Zealand”. In determining whether a person is resident in New Zealand for the purposes of the POCC, the Act applies the criteria specified in the Goods and Services Tax Act 1985 (GST Act).5
The GST Act requires Operators to treat customers as residing in NZ if two non-contradictory items of evidence support that conclusion (e.g. billing address, IP address, bank details, mobile SIM card, landline location, or other commercially relevant information). If at least two non-contradictory items support a conclusion that the customer is resident in NZ, but at least two other items indicate residence in another country, the operator must choose the more reliable evidence.
Operators whose revenue from taking bets on racing and sporting events from persons located in New Zealand does not exceed NZ$60,000 in a financial year will be exempt from the requirement to pay the POCC.
We will continue to monitor developments regarding the New Zealand POCC scheme. If you have any queries or would like further information, please contact any member of the Addisons Gambling Team.
1 See Point of Consumption Charges – Offshore Operator Guidance. Background to the POCC can be found in the Addisons Focus paper “New Zealand – Regulation of Offshore Betting Operators”.
2 The changes were introduced by the Racing Industry (Offshore Betting—Consumption Charges) Regulations 2021 (the Regulations).
3 Regulations, reg 7.
4 See the explanatory note to the Regulations
5 See section 8B of the GST Act.