New Zealand scraps low value GST exemption Dec 2019
New Zealand is to abolish its 15% Goods and Services Tax exemption for parcels at or below NZD 1,000 (€570) from 1 December 2019.
Sellers will instead be obliged to charge GST at the point-of-sale for goods at or below this level, register for quarterly GST returns and remit the tax to the New Zealand Inland Revenue.
For goods above NZD1,000, the current GST import collections at the border will continue to apply. Where a single shipment is above the NZD1,000 limit, but the individual goods are all below the this threshold, then the new regime applies. When the consignment contains goods below and above the limit, the seller can make an option to choose either route to settle the GST.
The Inland Revenue has already started contacting large e-commerce businesses to confirm their compliance requirements. This has been done with the support of the Australian Tax Office which has already implemented the same reform.
Non-resident sellers of goods to New Zealand consumers will have to GST register if they have annual sales above NZD 60,000 (€35,000).
Marketplaces liable for GST
Online marketplaces which facilitate sales to New Zealand may be held liable for GST collections instead of the underlying supplier. This would apply where the marketplace had substantial control over the Terms & Conditions of the sale, payment or delivery of the goods.
The marketplace must recover the GST from the supplier – generally straightforward if the marketplace controls the payment. If it does not, and the supplier defaults on the GST, then the marketplace may deduct the GST bad debt in its next GST return.
As some sellers do not offer delivery to New Zealand, an industry of ‘re-deliverers’ has evolved. These accept the goods at a postal address in the country of the seller, and then fulfil to the New Zealand consumer. Re-deliverers are also required to register for GST under the new regime, and charge their consumers. The risk is that the customer will be charged GST twice – by the GST registered-seller and re-deliverer.
GST compliance rules
Determining the liability to levy GST will be based on the customer’s delivery address.
There is no requirement to charge GST on sales to New Zealand GST-registered businesses. Although sellers expected to levy GST on over 50% of their sales may opt to charge GST on B2B transactions, too. They can provide their business customer with a GST invoice and then they may recover the tax suffered.
Non-residents registering for GST may opt for a full registration or a pay-only simplified return scheme. Returns are due on a quarterly basis.
Global scrapping of low-value consignment stock relief
New Zealand is following Australia in withdrawing its low-value GST relief. The European Union member states plan to scrap their €22 VAT exemption threshold, and replace it with a new parcel VAT scheme whereby sellers must charge VAT at the point-of-sale and declare it through a new ‘Import One-Stop-Shop’ return.
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