A Bill has been introduced to the New Zealand Parliament
that, if enacted, will apply goods and services tax (GST) to
remote services and intangibles (including e-books, music,
videos and software) supplied by non-resident suppliers to New
Zealand resident consumers.
Our earlier update ('New Zealand proposes new GST rules for
supplies of cross-border services', in the October 2015 issue)
outlined the discussion document released by the New Zealand
Government that preceded the introduction of the Bill.
Under existing law, GST is generally not imposed on
cross-border services and intangibles that are purchased by New
Zealand resident consumers from non-resident suppliers. The
growth of e-commerce means that the volume of such services and
intangibles on which GST is not collected is becoming
increasingly significant. There are also concerns that by not
imposing GST on such cross-border services and intangibles, it
is placing New Zealand suppliers of similar services and
intangibles at a comparative disadvantage.
While the growth in e-commerce has been the main catalyst
for the proposals, the proposals will capture both digital and
non-digital services (including consulting, accounting and
legal services). Applying the new rules to a broad range of
'remote' services avoids the complexity of designing the new
rules to target only digital services and is consistent with
the broad base of New Zealand's GST regime.
The amendments proposed in the Bill apply GST to 'remote'
services and intangibles supplied by non-resident suppliers to
New Zealand-resident consumers, by requiring non-resident
suppliers to register with the New Zealand Inland Revenue
Department and return GST on these supplies. 'Remote' services
are defined as services where, at the time of performance,
there is no necessary connection between the location of the
recipient and the place where the service is physically
Non-resident suppliers will be required to register and
return GST when their supplies of remote services to New
Zealand-resident consumers exceed NZD60,000 ($40,000) in a
12-month period (a registration threshold that is consistent
with the threshold applying to domestic suppliers). To minimise
compliance costs, non-resident suppliers will not be required
to return GST on supplies to New Zealand GST registered
businesses, and non-resident suppliers will not be required to
provide tax invoices to New Zealand consumers.
It is proposed that a non-resident supplier will be required
to treat a consumer as resident in New Zealand if two
non-conflicting pieces of evidence support that conclusion.
Various proxies are proposed for this purpose, including the
consumer's billing address, bank details and IP address, or
other such 'commercially relevant information'. Where a
non-resident supplier has two pieces of evidence indicating
that a consumer is resident in New Zealand and two pieces of
evidence indicating that the consumer is not resident in New
Zealand, the supplier must use the evidence that is the more
The proposals are intended to broadly align with OECD
guidelines on international VAT and GST, which seek to
establish a set of principles for allocating taxing rights
between countries. Australia has announced plans to introduce
similar rules, applying from July 1 2017.
If enacted, New Zealand's proposed new rules will come into
force on October 1 2016.
Tim Stewart (email@example.com)
Tel: +64 4 819 7527