June 14, 2019
New Zealand GST on low value imports to apply from 1 December 2019
New Zealand has moved closer to imposing Goods and Services Tax (GST) on low-value imported goods. Parliament’s Finance and Expenditure Select Committee completed its review of the (Bill) on 31 May 2019. The Committee recommends the Bill should be enacted with some amendments, notably delaying commencement of the imposition of GST on low-value imported goods from 1 October 2019 to 1 December 2019 to allow nonresident suppliers more time to prepare.
Scope of rules
The rules would apply to all goods (excluding alcoholic beverages and tobacco) valued up to NZD$1,000 that are supplied from abroad by a nonresident and delivered to New Zealand (distantly supplied goods).
New Zealand Customs will no longer collect any duty (including import GST) on consignments valued at NZD$1,000 or less, except for tobacco and alcohol.
Registration requirements for nonresident suppliers
Offshore suppliers, and some intermediaries, will be required to register and account for GST if their annual turnover of distantly supplied goods to non-GST registered New Zealand consumers exceeds NZD$60,000. Supplies to GST-registered businesses would not be caught by the new rules. However, the Committee recommends amending the Bill to enable suppliers to choose to charge GST on low value supplies to GST registered customers where more than 50% of supplies to New Zealand customers are to non-registered customers. Under this proposed change, offshore suppliers would not need to distinguish between consumers or businesses for supplies valued at NZD$1,000 or less.
The following intermediaries (whether residents or not) may be considered as deemed suppliers and may also be liable to register:
Inland Revenue to develop simplified compliance rules
Inland Revenue intends to develop a simplified online registration process for offshore suppliers. The development of a simplified “pay-only” GST return, with fewer fields to complete than standard GST returns, is also expected. Offshore suppliers claiming input tax deductions for GST costs will be required to use existing GST returns.
Nonresident suppliers of distantly taxable goods that become a registered person on 1 December 2019 will have a first taxable period from 1 December 2019 to 31 March 2020, followed by quarterly taxable periods.
Other features of the rules
Other features of the rules include:
For additional information with respect to this Alert, please contact the following:
Ernst & Young Limited (New Zealand), Auckland
Ernst & Young Limited (New Zealand), Wellington