On 1 May 2018, the New Zealand Government launched proposals for offshore suppliers of low-value goods to New Zealand consumers to collect and remit Goods and Services Tax (GST) on those goods with effect from 1 October 2019.

This is consistent with the introduction of GST on "remote services" effective in New Zealand from 1 October 2016.

Under the proposals:

• Offshore suppliers will be required to register, collect and remit GST on supplies of goods to New Zealand consumers if the value of each individual supply of goods is NZ$400¹ or less.
• Customs duty and cost recovery charges will no longer be collected on goods valued at or below this value.
• Customs will continue to impose customs duty, GST and other charges on consignments valued above NZ$400.
• A mechanism to prevent double taxation has yet to be determined. Double taxation can arise for multiple transactions of low value goods that are shipped in a single consignment that exceeds NZ$400 in value.
• Goods supplied to GST-registered businesses would be excluded unless the offshore supplier decided to zero-rate the supply for the purposes of recovering GST input tax credits.
• Offshore suppliers would be required to charge GST unless the recipient identified themselves as a GST-registered business or provided their GST registration number or New Zealand Business Number. We note there is no public register of GST registrations in New Zealand.
• A reverse charge (recipient of the goods accounts for the GST) would apply to GST-registered recipients that use goods for non-taxable purposes (such as private purposes).
• Offshore suppliers would be required to register for GST if their total sales in a 12-month period to New Zealand consumers exceed $60,000. This is the same threshold that applies to domestic businesses and to offshore suppliers of cross-border services. Offshore suppliers would not be required to collect GST on goods supplied to GST-registered businesses.
• A simplified "pay only" registration will apply for those offshore suppliers who will not be claiming any input tax credits. Quarterly GST returns will apply to offshore suppliers.
• Special rules are envisaged for online marketplaces and "re-deliverers" as follows:
  • If an offshore supplier sells goods through a marketplace, the marketplace (and not the supplier) would be required to register and account for the GST on the goods.
  • Re-deliverers are used by consumers when the supplier or marketplace does not offer shipping to New Zealand. The goods are instead shipped to an overseas "hub" or mailbox, which then ships the good to New Zealand. Under the proposals, re-deliverers would be required to register and return GST in respect of goods that they "re-deliver" to a New Zealand address.
  • The $60,000 GST registration threshold would also apply to marketplaces and re-deliverers.
• Penalties will apply to consumers who falsely represent that they are registered for GST.
• Inland Revenue will use data matching with other government agencies to identify non-compliant suppliers and consideration is being given to a joint registration system with Australia to assist with this.

Submissions on the proposals can be made to the New Zealand tax authorities by 29 June 2018.

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ENDNOTE

¹ Currency references in this Alert are to NZ$.

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CONTACTS

For additional information with respect to this Alert, please contact the following:

Ernst & Young New Zealand, Auckland

• Paul Smith, Head of Indirect Tax
  paul.smith@nz.ey.com
• Simon Dobson, Associate Director – Indirect Tax
  simon.dobson@nz.ey.com

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ATTACHMENT

PDF version of this Tax Alert