Offshore businesses must now comply with local goods and services tax requirements if annual sales to New Zealand exceed the threshold.
New Zealand’s GST loophole is now closed, with legislation taking effect on 1 December 2019 to curb the competitive advantage long-held by offshore businesses selling low-value goods to New Zealand customers.
All offshore suppliers, online marketplaces and re-deliverers must now register for GST if annual sales to the country exceed NZD $60,000.
What businesses must do if they exceed the threshold
Once the sales threshold has been reached, offshore businesses must:
- obtain a New Zealand IRD (Inland Revenue Department) number
- register for GST with the IRD
- ensure their accounting systems can raise invoices with GST of 15%, and show the value of GST charged in NZD
- file GST returns (frequency will depend on the value of sales to New Zealand)
- have a process to pay the GST to the IRD depending on the filing frequency
- ensure any websites correctly display the GST inclusive price when selling to New Zealand customers.
When does GST need to be charged on invoices?
GST should be added to the invoices of New Zealand customers when orders amount to less than NZD $1000. For orders over NZD $1000, NZ Customs is responsible for collecting and remitting the GST to the IRD.
What about B2B sales?
New Zealand GST is only charged to non-GST-registered customers. No GST should be charged to GST-registered businesses and the GST number of each of these customers must be kept as proof. If GST is incorrectly charged, the customer is required to seek a refund from the seller and not the IRD.
Accounting systems need to be compatible
Offshore businesses need to ensure their accounting systems have the following functionality:
- ability to track whether the sale is to a GST-registered business or private consumer
- ability to track whether the order value is greater or less than NZD $1,000. A practical solution would be to charge GST on all orders and therefore NZ Customs will not charge any additional GST.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.