From 1 December 2019, overseas businesses (non-resident suppliers) that sell low value goods to consumers in New Zealand may need to register for, collect and return, goods and services tax (“GST”).
GST on imported goods is currently collected at the border but is not collected for ecommerce sales where the GST and duty is less than NZ$60. This is because New Zealand’s Inland Revenue considered it uneconomical to do so. As ecommerce has grown, New Zealand is now introducing new rules which may require some overseas businesses to charge GST and account to New Zealand’s Inland Revenue.
What is GST on low value imported goods and how will it impact on my business?
GST is a tax charged on goods and supplies in New Zealand. Under the new GST rules, overseas businesses that sell goods to consumers in New Zealand may need to charge and account for GST.
When do the new rules apply?
The new rules become effective on 1 December 2019.
What is the definition of low value goods?
Physical goods valued at NZ$1,000 or less such as books, clothing, cosmetics, shoes, sporting equipment and small electronic items. This threshold is based on the customs value of the goods. Transport and insurance costs are excluded when calculating whether GST should be charged.
What is a consumer?
A consumer is a private individual who buys products and services.
Who do the new rules apply to?
Overseas businesses selling low-value goods directly to New Zealand consumers, including online marketplaces and re-deliveries, where supplies exceed, or are expected to exceed, NZ$60,000 in total over a 12 month period.
What is the GST rate?
The current GST rate is 15%.
When is GST not chargeable by the overseas business?
These changes do not apply to:
- Supplies of fine metal;
- Alcohol and tobacco products (GST, excise taxes and customs duties are applied at the border regardless of value);
- Low value goods sold to GST registered New Zealand businesses (for use in their business).
There is no change to the current processing of consignments over NZ$1,000 – the standard GST and duty calculation will be applied. If GST on the value of the goods has already been collected at the point of sale by the supplier GST will still be payable on any duty at the border.
How does it work?
All consignments valued at NZ$1,000 or less can be cleared on an Inward Cargo Report (“ICR”), a Simplified Import Declaration (“SID”) or a standard Import Declaration.
Consignments or goods valued over NZ$1,000 must be cleared on a standard Import Declaration, and the Import Entry Transaction Fee (IETF) and MPI’s BSEL will be charged.
Depending on turnover GST returns are filed monthly, two-monthly or six-monthly.
A GST return has to be filed at the end of every taxable period. You can do this online, through accounting software or a paper based return.
What should you do next?
If your total supplies to New Zealand consumers exceed or are likely to exceed NZ$60,000 in a 12 month period (this is approximately £30,000), the business will need to register for, collect and return New Zealand GST on those sales.
You are encouraged to register for GST before 1 December 2019.
Further information about the rules and details of how to register can be found on New Zealand’s Customs’ Service and Inland Revenue websites:
If you have any queries or require advice, please do not hesitate to contact a member of our team.