GST on on-line digital products

Points to note include:pjimage (2)

  • Off shore sellers of “remote services” will have to register for GST and pay the New Zealand Government if they sell more than $60,000 worth of services, including professional services, in New Zealand to non GST registered customers.
  • There will be no need to register for GST if sales are being made to GST registered businesses because the businesses could claim the GST back.
  • Many off shore businesses have said they will comply if the system is easy.
  • Australia is looking at introducing a register of off shore sellers.
  • Off shore sellers can recognize NZ customers through IP addresses, credit card BINs and phone numbers.
  • The collection of tax will start from 1 October 2016 to give time for off shore sellers to adapt their software so they can identify NZ customers.
  • The first GST period will be 6 months to 31 March 2017 or 2 monthly if the service provider prefers.
  • Future GST returns will be quarterly.
  • No tax invoices required.
  • If a business is charged GST by mistake and the amount is less than $1000, the supplier may issue a tax invoice so the NZ business can get the GST back. Otherwise the NZ customer will have to get the GST back off the supplier. If your client is charged GST by mistake, it would be best to send a model tax invoice, showing the details required, to the off shore entity to make it easy for it to comply.
  • NZ Customs is looking at how to gather GST on low value imports, like books. The $400 threshold for collecting GST on imports exists because it becomes uneconomical to collect GST on low value goods. Customs is to report back by April 2016.
  • A supplier and a New Zealand business could agree to the supplier registering for GST and supplying tax invoices. The supplier could zero rate the transactions. The two could also agree for the supplies to be deemed supplied within New Zealand.
  • Overseas suppliers are to treat NZ customers as not GST registered unless they have adequate evidence to the contrary.