A Christmas Treat for New Zealand Retailers
In case you’ve been hiding under a rock and missed it, 1st December saw the introduction of New Zealand’s latest tinkering to its GST regime, a low value imported goods GST, aka ‘the Amazon tax’.
With an intention to remove the GST cost component element from a New Zealand resident consumers buying decisions, and promoted as levelling the playing field for New Zealand based retailers with their foreign competitors, the Amazon tax rules will require foreign sellers of low value goods being imported into New Zealand by the New Zealand consumer to register for New Zealand GST, where the total value of supplies to New Zealand by the foreign seller exceeds the compulsory registration threshold of $60,000 per annum.
Low value goods are defined as being those having a customs value of less than $1,000 (amount paid by consumer less any duty payable by the supplier and any transport or insurance costs related to the item), the goods are outside New Zealand at the time of supply, they are supplied by a non-resident and they are delivered to New Zealand. To ensure there is no confusion between low value imported goods as defined and other imported goods, the new regime will refer to low value imported goods, not as ‘low value imported goods’ but instead as ‘distantly taxable goods’. Absolutely no chance of confusion with a term like that.
For the purpose of determining whether a non-resident supplier will exceed the compulsory registration threshold, there are three key principles to remember:
1. Supplies of distantly taxable goods to New Zealand GST-registered businesses can be ignored;
2. While freight and insurance costs are deducted from the value equation when determining what is and is not a distantly taxable good, these amounts are then included in the supply value calculation; and,
3. It is the total value of all supplies to New Zealand by the non-resident supplier that needs to be considered, which may include:
- The total value of supplies to consumers of goods that are located in New Zealand at the time of supply (not including any distantly taxable goods);
- The total value of supplies to consumers of services physically performed in New Zealand; and,
- The total value of remote services supplied to consumers (not including any services physically performed in New Zealand).
Along with non-resident suppliers who sell direct to the New Zealand consumer, also caught by the new regime are online marketplaces (used by non-resident suppliers to sell their goods and services) and re-deliverers (those offering mailbox redelivery services and personal shopping services from other countries) – because it is these parties who ultimately know where the distantly taxable goods are being sent, whereas the non-resident supplier will often not retain this information.
A supply of a distantly taxable good to New Zealand by a non-resident supplier (including an online marketplace or re-deliverer), will be presumed to have been supplied to a New Zealand customer who is not registered for New Zealand GST, unless the New Zealand customer has provided the non-resident supplier with their GST registration number, their New Zealand Business Number, or has otherwise notified the supplier of their New Zealand GST registration status.
The administration of the Amazon tax will be similar in nature to that of the Netflix tax (GST on remote services introduced from 1st October 2016), with GST returns being filed on a quarterly basis (with exception of a one off four month period for those registered from 1st December 2019).
New Zealand Customs will continue to collect the GST on imported goods with a value of more than $1,000 (although note some exceptions), as the Authority will on the import of all alcoholic beverages, tobacco and tobacco products which are specifically excluded from the distantly taxable goods definition.
A useful special report on the new rules can be located here - http://taxpolicy.ird.govt.nz/sites/default/files/2019-sr-gst-low-value-imported-goods.pdf
If you have any questions or would like a second opinion on any national or international tax issues, please contact me firstname.lastname@example.org