Electronic traders are reacting cautiously to the supply of internet domain name-holder details to the IRD, and would like more information about the issue.
National domain-name registry Domainz supplied the IRD with comprehensive information on the owners of all .nz domain names, following an official request.
IRD operations national adviser Neil McCarthy says the information will be used as part of the department’s audit work to identify the compliance issues associated with electronic commerce. "The department does not intend to spam .nz websites with tax information," he says.
The operations manager of international wool exchange Woolnet, Paul Stanley-Boden, says IRD's explanation is “in fairly broad terms”. He would be happier knowing more detail of how the department is going to use the information.
If the IRD is looking for new businesses that have started up on the internet alone, with no apparent physical place of business, and may be avoiding tax, “then I suppose that’s fair. But if it’s not that, you just have to ask why.”
In the US, he says, the equivalent of the Commerce Commission has used similar information to track down different internet operations run by the same company, to evaluate market dominance and anti-competitive behaviour. Boeing was one company investigated in this way.
“We’re not being anti-competitive, since our exchange is open to anyone. And we don’t have a problem on the tax side. But I’d still like to know more.”
Justine Pellett, marketing manager at online computer retailer Conduit, has a similar view. “It depends what [the IRD] defines as ‘compliance issues’ or ‘electronic commerce’,” she says. “I’d like to see some further explanation before I could comment on what our reaction might be.”
Xtra spokeswoman Mary Parker says users should be aware of the possibility of government departments and others coming by their domain-name ownership information.
“After all, it’s all on the Domainz web page, so it’s accessible,” she says. “If people are going to trade, whether electronically or from a bricks-and-mortar base, they have to understand there are risks [of tax-policing] involved,” she says.
Ashburton-based VantagePoint Solutions managing director Bob Girvan agrees the IRD “should come out and say clearly why they want the information".
All VantagePoint’s (formerly Girvan Computing) electronic transactions go into the company’s books, which are audited from time to time by the IRD anyway, he says. But electronic trading is all new ground, he says, and there is a risk that some traders could unintentionally fail to comply with the law as IRD interpets it in the e-commerce world.
“If there is an area of concern, then they should tell [a possibly infringing trader, or traders in general] ‘you should be aware of these points.’ Then they should give them a chance to rectify matters before coming down on them.”