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New Zealand: Proposed GST changes expected, telecommunications services

New Zealand: Proposed GST changes expected

New Zealand’s government announced its intention to change the goods and services tax (GST) rules for telecommunications services from 1 October 2020. Generally, this would be expected to increase GST collected on telecommunications services.


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The telecommunications services rules are some of the most complex under the GST law. Broadly, the GST effects depend on who initiates the service, their location, and who is the supplier. The complexity has meant that telecommunication services were excluded from the remote services rules, which applied from 1 October 2016. The remote services rules impose taxation on digital and other services provided by non-residents to New Zealand consumers.

Proposed changes

For telecommunications services, when the recipient is a consumer, the current location rule for GST to apply would be replaced with a residency rule. If their normal residence is New Zealand, GST would apply at a rate of 15%. However, this rule would be modified if the consumer has to be in a particular location to receive the telecommunications service.

In effect, this would mean that New Zealand residents would be subject to 15% GST on overseas roaming services. Visitors to New Zealand would continue to pay GST on telecommunications services received through their use of local SIM cards or accessing wireless (Wi-Fi) at internet cafes.

KPMG observation

The proposals are intended to align with the OECD’s VAT/GST guidelines and international best practice. The guidelines treat telecommunications services as remote services (those that can be supplied anywhere) rather than on-the-spot services (can only be supplied at a particular place). This is because it is said to be difficult to determine the location of the recipient.

The EU and other countries have already taken this approach. Australia continues to apply an approach which is similar to New Zealand’s current position.

Read a May 2019 report [PDF 63 KB] prepared by the KPMG member firm in New Zealand

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