The New Zealand Parliament has finally enacted legislation removing the GST exemption to import VAT for low value goods. New Zealand has recharacterized these as “distantly taxable goods” or “DTGs”.
The key consequence of making this change is that non-resident sellers of those DTGs are very likely to create a liability to register and account for GST on the supplies they make. This will happen if:
- immovable goods are delivered into New Zealand;
- those goods have a customs value of no more than NZD 1,000; and
- the supplier who is delivering into New Zealand has made such supplies which exceed NZD 60,000 in a 12-month period.
As well as non-resident suppliers, marketplaces and redeliverers will need to comply with the need to register and account for local GST.
This law, initially planned to have a start date of 1st October 2019, will come into effect from 1st December 2019. Therefore foreign B2C sellers of DTGs have only 5 months to determine if they have any need to register for New Zealand GST and, if they do, make arrangements to meet that obligtion.
The reason that the effective date has been pushed back is because of issues raised in a related consultation by a large volume of stakeholders. Main areas of concern revolved around the short time frame within which affected sellers would have to execute changes to their ERP systems, price points and contractual arrangements.
Impacted businesses now have an extra two months to prepare for the changes being introduced to level the playing field between foreign and domestic online companies. The system mirrors the changes Australia introduced to its treatment of B2C low value imports in 2018.
Contact our VAT experts now and find out how this change could affect your business.