The New Zealand Government has recently announced a proposal to close a loop hole which waived the requirement for foreign companies to collect GST on goods sold to New Zealand customers, if the value of the goods supplied is less than NZD $400.

"Domestic businesses have long called for greater fairness in the treatment of low-value goods from offshore retailers," says Revenue and Small Business Minister Stuart Nash in a media statement released earlier.

With this new change in place, businesses need to collect the GST at the moment of sale, meaning that instead of local customer paying the GST to New Zealand Customs, the burden of collection now shifts to the offshore company.

As a result, all offshore companies which sell goods to New Zealand companies will need to register for GST if the value of their annual sales to New Zealand customers exceed $60,000. These companies will then need to add and calculate GST on every sales invoice and return the amount to the Inland Revenue Department (IRD).

Though submissions on the proposal are due on 29 June 2018, however, there is strong support for this proposal from New Zealand businesses and it is likely that it will be passed into the law.

The proposal also sets up special rules for online marketplaces and "re-deliverers":

  • When an offshore supplier sells their goods through a marketplace, the marketplace needs to register and return the GST on the good instead of the supplier.
  • Re-deliverers are commonly hired by consumers when the supplier or marketplace does not offer shipping to New Zealand. The good is shipped to an overseas hub or mailbox, which then delivers the good to New Zealand. Under the proposal, re-deliverers need to register and return GST of the goods re-delivered to a New Zealand address.

The NZD $60,000 GST registration threshold would also apply to marketplaces and re-deliverers.

Talk to TMF Group

TMF New Zealand provides a full range of corporate services to help clients reduce risks, achieve compliance, control costs and simplify operations.

If you are a foreign business operating in New Zealand and would like to know more about the proposed change or any aspect of doing business in New Zealand, talk to us.

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