The New Zealand (NZ) government has now enacted the Taxation (GST Offshore Supplier Registration …) Act 2019 introducing a requirement for offshore companies selling low value imported goods to NZ consumers to register for and charge NZ Goods and Services Tax (GST). These new rules will apply from 1 December 2019.
Essentially, the changes are intended to bring offshore companies selling goods to NZ customers via websites or through online marketplaces into the NZ GST system. This follows similar rules being introduced in a number of overseas countries, including Australia. In NZ these rules also follow the requirements for offshore companies providing remote services to NZ consumers to register for GST.
The new rules are summarised below:
- The rules apply to offshore companies selling low value imported goods (also referred to as 'distantly taxable goods'), being goods valued at NZ$1,000 or less (including shipping and insurance), to NZ consumers.
- As with NZ companies, offshore companies/suppliers will only be required to register for and return GST when their supplies to NZ consumers exceed (or are expected to exceed) NZ$60,000 in a 12-month period.
- Offshore companies within the rules will need to comply with NZ GST compliance requirements, including obtaining an IRD number, regular/quarterly filing of GST returns and payment of GST to Inland Revenue, and provision of receipts.
- The rules apply to supplies of goods to NZ consumers. These rules do not apply on supplies to NZ registered business customers, although an offshore company relying on the fact that the customers are business customers will be required to obtain and maintain evidence to confirm that (such as, the customer’s GST registration number).
- There are additional rules which apply to electronic marketplaces (which includes any medium that allows customers to acquire goods, such as websites (such as eBay, Amazon, and Alibaba), internet portals etc. Broadly, the additional rules require the marketplace to register for, charge and return the GST rather than the underlying supplier (similar rules apply to re-deliverers). Provided certain conditions are satisfied, the marketplace and the underlying supplier can agree that the underlying supplier will register for and charge the GST.
- NZ Customs will not collect any form of duty on goods valued at less that NZ$1,000 (with some exceptions, such as for alcohol). Customs will still collect GST on parcels valued at above NZ$1,000, although GST registered offshore companies can choose to apply GST on parcels above NZ$1,000. There are also provisions which prevent double taxation requiring NZ Customs not to collect GST on goods that have already had GST collected.
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.