Complete Guide to GST in New Zealand

Complete Guide to GST in New Zealand for Digital Service Providers

GST rates in New Zealand 

How much is GST in New Zealand? 

The New Zealand GST regime exemplifies a modern, successful, continuously updated indirect tax system. The Goods and Services Act is the country’s central source of GST. Besides the central Act, the Inland Revenue has published numerous GST guides to make GST compliance, rules, and requirements more straightforward for domestic and foreign taxable persons.

Business entities that make taxable supplies over the mandated threshold or wish to charge GST on their sales should register for GST. 

GST threshold in New Zealand 

The GST New Zealand Act defines the requirements and conditions for mandatory GST registrations. When the entity conducts taxable activity and reaches the turnover threshold, it should register for GST as indicated in the previously mentioned Act. 

The interested economic operator can also register voluntarily, e.g., when it intends to claim input tax credits for its business purchases. 

The  GST threshold in New Zealand is the same for both domestic and foreign digital service providers. 

The mandate for GST registration is based on the turnover the economic operator made in the previous 12 months of its taxable activity or when it is expected to surpass the threshold in the next 12 months.

VAT registration threshold for resident businesses: NZD 60,000

VAT registration threshold for non-resident businesses: NZD 60,000

VAT registration threshold for foreign providers of digital services: NZD 60,000

GST Taxable Activities in New Zealand

Types of taxable activities that trigger mandatory GST registration:

• Supply of goods and services for consideration;
• Exports;
• Imports of goods and services; 
• Overseas sales of low-value goods to customers in New Zealand
• Provision of digital services to customers in New Zealand

Tax Representative in New Zealand 

Non-resident providers of listed digital services and products could register without needing local tax agents’ services. 

Tax registration 

Standard Registration 

Domestic or foreign taxable persons with a place of business or permanent establishment in the country should follow the steps specified for standard registration. 

Simplified tax registration 

Regarding the procedure for mandatory registration for overseas entities making taxable supplies in New Zealand, the Inland Revenue has established five types of registration based on the kind of activity.

Remote vendors of digital services without a physical presence in the country should follow a specifically designed, simplified registration procedure. This procedure, conducted online following the default guide guidelines, will require applicants to reveal basic information about their business.

GST on Electronically Supplied Services in New Zealand 

Digital Services

Non-resident providers of remote services should register for GST when they surpass the GST threshold.  

After registration, non-resident suppliers of digital services should charge GST for B2C supplies. Regarding B2B supplies, the reverse charge mechanism should be used when the recipient is a GST-registered local business.

How much is GST in New Zealand for Electronically Supplied Services?

  The GST rate New Zealand for most digital goods and services is 15%. 

Taxable Digital Services in New Zealand

The following types of digital services trigger mandatory VAT registration of non-resident providers:

• Audio and video streaming services 
• SaaS services
• E-books and publications 
• Intermediation between third parties offering goods or services and those seeking them.
• Travel arranging services

Marketplace and Digital Platform Operators Rules

The non-resident operator of a digital platform that facilitates the supply of remote services, between underlying suppliers(foreign or domestic), should register and charge GST to local customers instead of the underlying supplier. 

However, a service agreement between the underlying supplier(domestic) and the platform operator could address this differently, mainly stipulated by permitting a resident provider to claim input tax credits. 

The registration threshold and conditions for a non-resident digital platform operator are the same as those for a non-resident remote service provider. When the platform operator receives its GST registration certificate, it should collect and remit GST for all underlying supplies. 

Invoicing Rules

The non-resident supplier of remote services, GST registered, isn’t obligated to issue a tax invoice to its customers. In the cases of B2B transactions, when it is chosen to treat the transaction as a zero-rate supply to be able to claim input tax credits, the issuance of a tax invoice is recommended. 

The minimum requirements of the invoice are the following: 

General information 

• Date of invoice issuance 
• Date and time of supply

Seller information

• Company name
• Full address(head office)
• Billing address if different from company address
•  GST number

Customer information

• Name 
• Full address
• GST number(if applicable)

Fiscal Information

• Tax amount for each type of goods or services supplied
• Net value per tax rate
• Distinct line of gross value per tax rate or tax-exempt supply
• Type of the transaction by reference to the categories indicated in the VAT Act 
• Total tax  amount 
• Invoice Total tax exclusive
• Rate of any discount
• Total invoice amount

Foreign Currency Invoice in New Zealand  

In most cases, issuing an invoice in a foreign currency is permitted. However, submitting a GST declaration should be processed exclusively in local currency.  

GST Return in New Zealand 

Standard Return 

Local businesses and foreign businesses with permanent establishment in the country are obligated to follow the procedure for issuance of the standard return in electronic format. 

Simplified return 

During the registration procedure, overseas providers of remote services can choose what kind of GST returns they plan to submit to Inland Revenue. They can choose the simplified GST return based on the pay-only method, which will prevent them from having a chance to claim input tax credits. The other option is to choose the type of return through which they can also claim input tax credits. 

GST Simplified Return

Penalties for late reporting and omitted declarations 

Late GST return filing, late GST payment, and late registration are situations in which taxable persons would most likely have the obligation to pay a penalty and/or interest for not being compliant in the prescribed timeframe. 

Fines and penalties according to the GST New Zealand Act and the Tax Administration Act:

The formula used for late filing penalties depends on the condition of the previously chosen accounting method. The taxable person who chose an accounting method based on payment will bear the penalty of NZD 50. The taxable person who chose the invoice accounting method or hybrid method will be obligated to pay a late filing penalty of NZD 250. 

Late payment penalties start from the day after the payment due date. 

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