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New Zealand To Remove GST Exemption For Low-Value Imports

by Mary Swire, Tax-News.com, Hong Kong

15 November 2017


New Zealand's new Revenue Minister, Stuart Nash, has said that the country will reduce or eliminate the goods and services tax exemption for low-value imports.

Presently goods worth no more than either NZD226 (USD155.6) or NZD400 (depending on if they are subject to duty) are not subject to goods and services tax on import. In essence, the tax authority waives liability to GST if the amount of tax at stake is not more than NZD60.

In an interview with Newstalk ZB radio, he said the policy would "absolutely" change.

Retail NZ welcomed the announcement, with Greg Harford, the association's General Manager for Public Affairs, stating on November 15: "For many years, New Zealand retailers have been disadvantaged by the fact that they have to [levy] tax in New Zealand while foreign websites don't, even though they compete in the New Zealand market. This is the first time that a Revenue Minister has committed to fixing this issue, and we want to congratulate Mr Nash on his leadership. While the timeline has yet to be finalized, we are really pleased that Minister Nash is taking the issue seriously, and we urge him to implement a GST registration requirement from July 1, 2018, in line with the Australian Government."

"GST is a key component of Government revenue streams, and a GST registration requirement [on foreign firms, to account for supplies to New Zealand] will net the Government around NZD5.8bn over the next 10 years. Closing the current tax loophole will also mean that New Zealand businesses are no longer disadvantaged by Government tax policy."

"The issue is becoming more pressing as online shopping grows in popularity, and as Amazon is about to move into Australia. It's just not right that Kiwi businesses that employ New Zealanders and keep our communities vibrant are taxed, while massive foreign corporations don't pay their share of tax for doing business here."

In its base erosion and profit shifting (BEPS) Action 1 report, on tackling the tax challenges of the digital economy, the OECD proposed that countries should eliminate such exemption for low-value consignments and tax cross-border business-to-consumer supplies of broadcasting, telecommunications, and electronic services in the location of the consumer.

TAGS: tax | business | value added tax (VAT) | goods and services tax (GST) | Australia | tax authority | New Zealand | retail | services | BEPS

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