New Zealand: New Zealand proposes new GST rules for supplies of cross-border services

International Tax Review is part of Legal Benchmarking Limited, 4 Bouverie Street, London, EC4Y 8AX

Copyright © Legal Benchmarking Limited and its affiliated companies 2025

Accessibility | Terms of Use | Privacy Policy | Modern Slavery Statement

New Zealand: New Zealand proposes new GST rules for supplies of cross-border services

connolly.jpg

Shaun Connolly

New Zealand's Government has released a discussion document inviting submissions on proposed changes to the GST treatment of cross-border supplies of services and intangibles. The proposed new rules, which are broadly aligned with OECD draft guidelines on the same topic, would require offshore suppliers to register and account for GST when they supply services and intangibles to New Zealand-resident consumers. The document considers both 'on-the-spot' services, which are typically consumed at the same time and location as they are physically performed, and 'remote' services, which are typically consumed in a different location to where they are physically performed. In the case of on-the-spot services, the existing GST rules are generally considered to achieve the right result, because services performed in New Zealand are subject to GST, whereas services performed outside New Zealand generally are not.

However, the existing rules mean that remote services supplied from outside New Zealand to a recipient in New Zealand are not subject to GST unless the existing 'reverse charge' rule applies. That rule applies to non-business recipients only if the value of imported services received by them exceeds NZD60,000 ($38,000) per year, so it will not apply to the vast majority of consumers.

The discussion document proposes a new rule which would deem remote services supplied by a non-resident to a New Zealand resident to be supplied in New Zealand, and therefore subject to New Zealand GST. The rule would apply to all types of services, not only to 'digital' services. Non-resident suppliers would be required to register and account for GST in respect of supplies made to New Zealand residents if the total value of those supplies exceeds a certain threshold. Submissions are being sought on an appropriate threshold, with NZD10,000 and NZD60,000 being suggested as possible options.

A number of practical and design issues are touched upon in the discussion document, including:

  • the type of information a non-resident supplier could rely on as a proxy for determining whether a customer is New Zealand resident;

  • whether GST would apply to business-to-business (B2B) supplies or only business-to-consumer (B2C) supplies;

  • whether non-resident suppliers would be entitled to input credits; and

  • how the new rule will be enforced.

The document also foreshadows potential changes to the laws regarding GST on low-value imported goods, including reducing the current de minimis threshold and changing the collection mechanism so that the foreign supplier is required to register and account for the GST instead of the recipient. The treatment of imported goods will be the subject of a separate, more detailed, discussion paper later in the year.

Shaun Connolly (shaun.connolly@russellmcveagh.com), Wellington

Russell McVeagh

Tel: +64 4 819 7545

Website: www.russellmcveagh.com

more across site & shared bottom lb ros

More from across our site

E-invoicing is currently characterised by dynamism, with fragmentation acting as a key catalyst for increasing interoperability, says Aida Cavalera of the International Observatory on eInvoicing
Pillar two and the US tax system ‘could work in harmony’, Scott Levine tells ITR in an exclusive interview to mark his arrival at Baker McKenzie
Peter White, who has a tax debt of A$2 million, has been banned for five years from seeking registration with Australia’s Tax Practitioners Board (TPB)
Wopke Hoekstra’s comments followed US measures aimed against ‘unfair foreign taxes’; in other news, Grant Thornton and Holland & Knight made key tax partner hires
An Administrative Review Tribunal ruling last month in Australia v Alcoa represents a 'concerning trend' for the tax authority, one expert tells ITR
A recent decision underlines that Indian courts are more willing to look beyond just legal compliance and examine whether foreign investment structures have real business substance
Following his Liberal Party’s election victory, one source expects Mark Carney to follow the international consensus on pillar two, as experts assess the new administration
A German economics professor was reportedly ‘irritated’ by how the Finnish ministry of finance used his data
Countries that care about the fair taxation of tech multinationals and equitable global distribution of wealth should back the UN’s tax framework, writes economist Abdelmalek Riad
The cuts disproportionately affected staff in certain positions, the report also found; in other news, MHA announced the €24m acquisition of Baker Tilly South East Europe
Gift this article