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GST on low-value goods starting from 1 December 2019

GST on low-value goods starting from 1 December 2019

What to look out for with the new GST on “low-value goods”.

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Peter Scott - KPMG New Zealand

Partner - Tax

KPMG in New Zealand

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GST on low value goods

On 1 December 2019, the new “low-value goods” regime will begin imposing goods and services tax (GST) at 15% on goods acquired by New Zealand consumers from offshore suppliers. 

The new regime will apply to goods with an individual value of NZ$1,000 or less and will require the following non-resident entities to register and account for GST on sales to New Zealand customers:

  • Marketplace operators such as Amazon, eBay and Alibaba;
  • Redeliverers who arrange for the delivery of low-value goods from an offshore location to New Zealand such as YouPost;
  • Non-resident suppliers who sell direct to New Zealand customers where their sales aren’t made via a marketplace operator or a redeliverer.  

Non-resident suppliers will need to determine how they incorporate GST into their pricing.  In most cases, it is expected they will increase their prices by adding the GST to the amounts payable by New Zealand customers. 

The new low-value goods regime is similar to the remote services or “Netflix” tax that is already in place in New Zealand and is also similar to the low-value goods regime already in place in Australia. 

For New Zealand customers, a few things are worth noting: 

  • The new regime applies to goods where money is paid or an invoice issued for low-value goods on or after 1 December 2019. 
  • If goods are subject to GST as low-value goods, GST will not be imposed by New Zealand Customs. If the total value of goods imported into New Zealand as a single package are less than $1,000, New Zealand Customs will not impose any duty or charge any import entry fees.
  • The $1,000 low-value goods threshold applies on an item by item basis. For example, if you buy three shirts worth $400 each from a non-resident supplier that are delivered in one package, GST will be charged even though the total imported package has a value over $1,000. 
  • If the total value of a package is over $1,000, New Zealand Customs will still collect tariff duty (if applicable) as well as import entry fees of $55.71 from the New Zealand customer as the goods are imported into New Zealand. 
  • As a customer, you will be able to ask for a receipt from the supplier that details the GST charged or included. In addition, packages as they enter New Zealand will include information to notify New Zealand Customs of the contents of the package and the extent to which GST has been accounted for

Given the likely impact of the new low-value goods regime, 2019 might be the time to get your overseas Christmas shopping done extra early. 

If you would like to find out more information, please contact Peter Scott or John Javier in our Indirect Tax team.

© 2019 KPMG, a New Zealand partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss cooperative. All rights reserved.

KPMG International Cooperative (“KPMG International”) is a Swiss entity.  Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm.

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