United States

New Zealand

The country achieved two to three percent growth following the Great Recession, continuing the country's decades-long transformation from an agrarian economy to a more industrialized, free-market economy.

Content provided below reviewed and updated on Jan. 15, 2018.

Legislative effective date

Oct. 1, 2016

Name of tax

Goods and services tax (GST)

Statute of limitation

Four years from the end of the GST return period in which the tax return was provided (unless the person has knowingly or fraudulently failed to disclose material facts)

Standard rate of VAT

15 percent

Electronic supplies

In keeping with many other countries, if a service is provided for nil value, then there is no GST to account for (save for transactions where the recipient of the supply is not GST registered and is associated with the supplier). However, this might be challenged for intercompany transactions or structures perceived to be set up for avoidance purposes.

New Zealand’s legislation defines digital (or remote) services as a service where at the time of performance of the service, there is no necessary connection between the physical location of the customer and the place where the services are performed. New Zealand notes the following as specifically being digital/remote services subject to the standard rate:

  • Supplies of digital content, such as e-books, movies, TV shows, music and online newspaper subscriptions
  • Online supplies of games, apps, software and software maintenance
  • Webcasts or distance learning courses
  • Insurance services
  • Gambling services
  • Website design or publishing services
  • Legal, accounting or consultancy services

Beyond the digital/remote services noted above, New Zealand has implemented rules, as part of digital/remote services legislation, to tax certain cross-border supplies of telecommunications services. These services include the transmission, emission or reception of information by certain technical systems, including access to global information networks but exclude content.

Registration

The legislation requires that all foreign suppliers of digital/remote services in New Zealand register for GST, unless they are below the revenue threshold, which is currently NZ$60,000 on a rolling 12-month basis.  Note supplies made to GST registered persons are not counted towards the revenue threshold.

Customer identification

Although not defined in this way, New Zealand distinguishes B2B and B2C along GST registration lines. A customer who is registered for GST is treated as a business customer, non-GST registered persons are treated as end-consumers.

No GST registration is required where supplies are made solely to business to business (B2B) customers. Registration is only required where supplies exceed the threshold for business to consumer (B2C) supplies.  If GST registration is so required, the supplier can then choose to zero rate B2B supplies should they wish to claim back GST input tax incurred on any B2B services supplied.  Note that for services supplied by nonresident suppliers’ all services should be treated as B2C unless they have provided a valid GST registration number.

If the GST status of the customer is not verified, but is believed to be in business, the Inland Revenue Department (IRD) will accept the following factors for supplies typically made to business customers and therefore, will not require the supplier to register for NZ GST:

  • The nature of the supply (for example, advertising services)
  • The value of the supply (for example, the provision of a high-value software package that would only be associated with business use)
  • The terms and conditions of the provision of services (for example, software that is licensed for enterprise use across a large number of networked computers)

There are no exemptions for type of consumer, so organizations such as charities, government departments, nonprofit entities, health and education establishments should all be charged VAT if they are unable to provide a valid GST number.

Note that for businesses that are not GST registered because they carry on an exempt activity (such as the provision of financial services) they may be required to self-assess GST under a reverse charge rule.

Customer location

In the main, a consumer needs to be a New Zealand resident for the cross-border remote service provisions to apply. This means that short-term visitors or organizations not otherwise established in New Zealand will not be charged GST even if the cross border remote services are used and enjoyed in New Zealand.

To verify residency, the supplier should obtain two pieces of non-conflicting evidence.  For example the person’s billing address, the IP address or other geo-location method, the person’s bank details, the mobile country code or fixed landline location, or other commercially relevant information.

By contrast, offshore telecommunications providers are required to charge GST on services provided to all persons physically present in New Zealand including nonresident consumers who are temporarily in New Zealand if the total value exceeds the mandatory registration threshold of NZ$60,000 and the supply is initiated in New Zealand.

Supplier identification

A supplier is any person who makes taxable supplies of digital/remote services in excess of NZ$60,000 in a 12-month period.

For supplies made through an agency, it is possible to delegate the responsibility for complying with the GST rules to the agent if both parties agree.

Procedural matters

When the determination is made that a foreign digital/remote service provider is liable to charge GST, there are streamlined procedures available for registration through the standard process. The foreign supplier must complete a GST registration application form, IR 994, which must be submitted together with certain required documentation. The streamlined approach allows for the application without a New Zealand IRD number; rather, it utilizes the tax ID number of the supplier’s country of residence. The items required to be included are as follows:

  • Name
  • Contact details
  • Country of residence (including tax ID number)
  • A description of the business activity
  • Website address

If a foreign supplier is already registered for GST under the standard regime, there is no need to register separately.

Historic transactions

If the foreign supplier does not register, charge, collect and remit GST until a later date, the IRD has the authority to retroactively recover 15 percent of the consideration charged by the supplier to the end user. However, as this legislation was only effective as of Oct. 1, 2016, the Inland Revenue Department only has the authority to retroactively charge GST to that point.

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