GST on “remote” services – additional guidance released
Tax Alert - June 2016
By Hana Straight
New Zealand has enacted legislation that requires non-resident businesses providing remote services to private consumers to register for New Zealand GST if their New Zealand supplies exceed the threshold of NZ$60,000 per annum. Details of the new regime can be found in a prior article here.
The new rules will apply to supplies made on or after 1 October 2016.
New Zealand’s Inland Revenue Department has now released additional guidance providing further information in respect of the more practical aspects of the legislation.
Registration and Compliance
GST registration will be available from 1 August 2016 and is likely to require the following information:
- The applicant’s name;
- Contact details;
- Country of residence;
- Any existing tax identification numbers;
- A description of the business activity;
- Website address; and
- Whether the applicant will be returning GST or returning and claiming GST.
For the period from 1 October 2016 to 31 March 2017, non-resident suppliers of remote services will have a taxable period of six months (or an optional taxable period of two months). Following these periods (i.e. from 31 March 2017), GST returns will be quarterly with period ends of 30 June, 30 September, 31 December and 31 March.
GST returns are due to be filed, and payments made, on the 28th day of the month following the end of the taxable period, with exceptions being returns and payments otherwise due 28 December (which moves to 15 January) or 28 April (which moves to 7 May).
The Commissioner’s Discretion
The legislation requires a non-resident to determine:
- If the customer is a NZ resident
- If the customer is a GST registered business.
The determination of residency is based on a list of commercially available proxies that suppliers may hold. A supplier must hold two non-contradictory pieces of evidence to support their conclusion.
Non-residents are required to assume that a NZ resident customer is not a GST registered business unless the customer has provided their GST registration number, New Zealand Business Number or notified the supplier that they are a GST registered business.
In both situations, the Commissioner of Inland Revenue can agree or prescribe an alternative approach depending on the nature of the supplies.
Non-resident Operators of Marketplaces
One of the key features of the legislation is the requirement for non-resident operators of electronic marketplaces (e.g. app stores) to register and return GST if their supplies exceed NZ$60,000 in a 12 month period (instead of the underlying supplier).
Upon agreement with Inland Revenue, non-resident operators of non-electronic marketplaces can also register and return GST instead of underlying suppliers.
For more information on this area, please contact one of our indirect tax specialists.