New Zealand has now enacted new legislation that requires offshore suppliers of digital products and ‘remote services’ to register for, charge and remit GST (@ 15%) when they sell to New Zealand private consumers. This change takes effect on supplies made on or after 1 October 2016.

1. 21
GST on cross-border supplies of
remote services – are you ready?
New Zealand has now enacted new
legislation that requires offshore suppliers
of digital products and ‘remote services’
to register for, charge and remit GST (@
15%) when they sell to New Zealand
private consumers. This change takes
effect on supplies made on or after 1
October 2016.
A remote service is defined as a service that, at the time of
the performance, has no necessary connection between the
physical location of the recipient and the place where the
services are performed. Examples of remote services include:
• 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
• webinars or long distance learning courses
• insurance services
• gambling services
• website design or publishing services
• legal, accounting or consultancy services.
Business to customer supplies
Offshore suppliers of digital products and remote services
into New Zealand will need to establish adequate systems to
determine where their customers are based. They must treat
a customer as a New Zealand resident on the basis of two
non-conflicting pieces of evidence. Examples of acceptable
evidence include:
• the customer’s billing address
• the internet protocol (IP) address of the device used by the
person or another geolocation method
• the customer’s bank details
• the mobile country code (MCC) of the international
mobile subscriber identity (IMSI) stored on the subscriber
identity module (SIM) card used by the customer
• the location of the customer’s fixed landline through which
the service is supplied to them
• other commercially relevant information.
If the value of their supplies to New Zealand resident private
consumers exceeds the registration threshold of NZ$60,000 in
a 12 month period, offshore suppliers will need to register for
GST. They may also need to review their pricing to factor in
this additional cost.
In some circumstances an electronic marketplace may be
treated as the supplier and will be required to register for
GST. This will occur in situations where customers would
normally consider the marketplace to be the supplier, and
this is reflected in the contractual arrangements between the
parties.
Business to business supplies
Remote services to New Zealand GST registered businesses
will not be subject to GST. However, offshore suppliers will
be able to zero-rate business-to-business supplies; this will
allow them to recover NZ GST.
Paying GST
A simplified “pay-only” registration system will be made
available to offshore suppliers that are only required to return
GST and who do not have any New Zealand GST costs to
claim back.
For the period from 1 October 2016 to 31 March 2017,
non-resident suppliers of remote services will have a default
taxable period of six months (or an optional taxable period of
two months). After this transitional period, GST returns will
be required to be lodged quarterly.
Offshore suppliers will not be required to have a fully
functional New Zealand bank account to register for GST.
Offshore suppliers will be able to apply to be registered
from 1 August 2016, with the registration taking effect from 1
October 2016. For assistance with understanding what these
changes may mean for you please contact us.
Need more information?
Contact:
Dan Lowe
Associate, Tax
Grant Thornton New Zealand
T +64 (0)9 308 2531
E dan.lowe@nz.gt.com
© 2016 Grant Thornton New
Zealand Ltd.
Grant Thornton New Zealand
Ltd is a member firm of Grant
Thornton International Ltd
(GTIL). GTIL and the member
firms are not a worldwide
partnership. Services are
delivered by the member firms.
GTIL and its member firms
are not agents of, and do not
obligate, one another and are
not liable for one another’s acts
or omissions. Please see
www.grantthornton.co.nz
for further details. This
brochure is general in nature
and its brevity could lead
to misrepresentation. No
responsibility can be accepted
for those who act on its content
without first consulting us
and obtaining specific advice.
Articles may be reprinted with
our written permission.
Are the services “remote services”
supplied to a person resident
in New Zealand?
section 8(3)(c)
Are the services supplied to a
registered person for the purposes of
their taxable activity?
section 8(4)
Are the services physically performed in New
Zealand by a person who is in New Zealand at
the time the services are performed?
Are the services supplied to
a registered person for the
purposes of their taxable
activity? section 8(4D)
No GST applies
The supplier chooses to treat
the supply as a taxable supply?
GST applies at the 15% rate
GST applies at the 0% rate
section 11A(1)(x)
No GST applies
Do the supplier and the
registered person agree that the
supply will be a taxable supply?
GST applies at the 15% rate No GST applies
GST applies at the 15% rate
Summary of the new place of supply rules for services
No - new rules Yes – existing section 8(3)(b)
No No
NoNo
No
YesYes
Yes
Yes
Yes