New Zealand GST: Online Shoppers To Pay Tax From 2019 New Zealand GST: Online Shoppers To Pay Tax From 2019

New Zealand Online Shoppers To Pay GST On All Purchases From 2019

New Zealand will scrap its low-value threshold for imported goods from 2019.

NZ Revenue Minister Stuart Nash has confirmed overseas websites will have to collect GST from New Zealand customers from next year, reports the NZ Herald.

From 2019, foreign retailers with total sales greater than $60,000 NZD per annum will be required to register to collect GST on all goods valued under $400 NZD. This will bring the import laws in line with domestic businesses who are already required to collect GST.

Mr Nash said:

"Domestic businesses have long called for greater fairness in the treatment of low-value goods from offshore retailers.

"Foreign companies are not required to collect GST on goods under $400. We are now calling for feedback on a system to register these suppliers for GST"

The Government estimates the proposal will collect $53 million in revenue in 2019/20, $78 million in 2020/21 and $87 million in 2021/22.

Customs Minister Meka Whaitiri clarified that GST has always been payable however a system has not been in place as “it is not cost effective for Customs to collect it when it is $60 or less”

She said:

"GST is collected at the border for goods over $400. We propose making offshore suppliers collect GST on low value goods at the moment of sale, and in turn, buyers of these goods will no longer pay Customs tariffs or border security and biosecurity fees”

While it is good news for local retailers, some warn it could lead to increased competition. General manager of NZ online retailer Mighty Ape Dylan Bland said:

"I worry for any local retailer who sees this as the silver bullet - a 15 per cent price advantage is not the primary reason Kiwis have changed their shopping habits. It may also have the longer-term impact of forcing some of these offshore retailers such as Amazon into the New Zealand market so they can offset their GST which moves the threat closer to home”

UPDATE 14/05/18:

There will be no change to the de minimis on 01 January 2019.

The Government is proposing a change to a value based de minimis on 01 October 2019, collecting the GST on goods under $400 off shore: http://taxpolicy.ird.govt.nz/news/2018-05-01-gst-imported-low-value-goods-proposals-launched#fact-sheet.

The Import Entry Transaction Fee of $49.24 will be collected on import lodgements where the goods are valued at NZD400 or more.

eShopWorld Insight:

New Zealand online shoppers will be accustomed to not paying GST on cross-border purchases, therefore retailers selling into New Zealand run the risk of a bad customer experience if they request payment at the door vs at the checkout. One way of avoiding this is to integrate a fully-landed cost into the checkout so there are no surprises for the customer upon receipt. Retailers interested in or already shipping to NZ will need to register for GST by the deadline.

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