In 2013, the New Zealand Customs Service (NZCS) embarked on the process of reviewing and modernizing the current customs legislation. The Customs and Excise Act 2018 (the Act), represents a major re-write of the current Customs legislation. The new legislation is effective 1 October 2018.

Key changes under the Act

The new Act has resulted in a myriad of changes to the current framework – everything from the movement of international passengers to information sharing provisions.

Some of the substantial changes under the Act include:

• Ability to store records offshore or in the cloud
• Introduction of Inland Revenue style compensatory interest and late payment penalties
• Ability of the NZCS to issue binding valuation rulings
• Ability of importers to declare a provisional value for goods in specific circumstances and declare a final value later

Importers need to start considering the impact of the legislative changes on their business, if they have not done so already, to ensure they become familiar with and make changes to comply with the new Act.

Provisional Value Regime

One of the fundamental changes under the Act is the introduction of the Provisional Value Regime.

The regime will permit importers to declare a provisional value for goods in specific circumstances and declare a final value later.

There is certain criteria to register for the regime, however, broadly those who make transfer pricing adjustments or make royalty payments should be eligible to register. Taxpayers should consult their local tax professional to confirm eligibility.

Key points to note include:

• Preferential treatment will be given to those importers that have an Advance Pricing Agreement with the New Zealand Inland Revenue.
• The formal mechanism will deal with transfer pricing adjustments and other adjustments to the customs value of imported goods.
• Importers not enrolled in the regime may be exposed to interest and late payment penalties if there is a change in the value of the goods.

———————————————
CONTACTS

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

Ernst & Young New Zealand, Indirect Tax, Auckland

• Paul Smith
  paul.smith@nz.ey.com
• Matthew Minnema
  matthew.minnema@nz.ey.com

———————————————
ATTACHMENT

PDF version of this Tax Alert