New Zealand: New Zealand proceeds with reform of GST on low-value imported goods

New Zealand is changing the goods and services tax (GST) on low-value imported goods. The Taxation (Annual Rates for 2019-20, GST Offshore Supplier Registration, and Remedial Matters) Bill was introduced in New Zealand's Parliament in December 2018.

The Bill follows a government discussion document released in May 2018 (discussion document), which proposed requiring offshore suppliers to collect GST on low-value goods to be supplied to consumers in New Zealand.

Currently, New Zealand's Customs Service collects import duties and GST on imported goods. GST is not collected on imported goods where the amount of duty or taxes collectable is less than NZ$60 ($40), which equates to NZ$400 worth of goods if GST is the only relevant duty.

In recent years, online shopping and e-commerce have led to an increase in the volume of low-value goods imported into New Zealand and, therefore, an increase in the volume of goods on which no GST is collected. This has led to concerns that domestic retailers might be at a competitive disadvantage by having to charge GST on their sales while foreign online sellers could sell low value goods to New Zealand consumers without charging GST.

As a result, the Bill would require GST to be collected and returned on goods with a value of NZ$1,000 or less that are supplied by a foreign supplier to a New Zealand consumer. The NZ$1,000 threshold is an increase from the NZ$400 threshold originally proposed in the discussion document.

As proposed in the discussion document, offshore suppliers that supply NZ$60,000 or more of goods or services to New Zealand consumers would be required to register for and return GST on those supplies. This is consistent with the threshold at which domestic suppliers are required to register for GST. Other key aspects of the proposal include:

a) Electronic marketplaces would be required to register and return GST (as opposed to the actual supplier) when applicable goods are supplied through the marketplace to a New Zealand consumer. One result of this may be that offshore suppliers supplying goods through an electronic marketplace would have GST affect their pricing, despite the supplier itself not meeting the NZ$60,000 threshold;

b) Re-deliverers of goods could also be required to register for and return GST if certain conditions are satisfied (such as the actual supplier of the goods not delivering, arranging or assisting the delivery of the goods to New Zealand); and

c) The proposed amendments would not require the collection of GST on supplies of low-value goods to GST-registered New Zealand businesses.

The proposed amendments in the Bill, if enacted, would apply to supplies made on or after October 1 2019. The Bill has been referred to Parliament's Finance and Expenditure Committee, with submissions being accepted until February 28 2019.