GST – Provision of Online Goods and Services

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GST – Provision of Online Goods and Services
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GST – Provision of Online Goods and Services

As at 1 October 2016 New Zealand joined a host of nations in applying GST to a broad range of remote services. This type of tax is commonly referred to as the “Netflix tax” and is designed to tax cross border provisions of goods and services which are supplied remotely by non-resident businesses with no physical presence in NZ.

Remote services has been broadly defined and includes online supply of software and digital content such as video and music streaming and online gambling services. The online provision of traditional non digital services are also captured which include insurance, consultancy and advisory services.

The supplier of the remote service will be required to ascertain the residency of a customer by analysing the customers, billing address, the IP address or device or geolocation method, the person’s bank details, the mobile country code or the location of the customers fixed land line or any other commercially relevant information.

The supplier will be required to presume the customer is not GST registered unless the GST registration of a customer can be established by for example being provided with a NZ GST registration number.

Where a supplier operates within a larger platform of suppliers such as an online market place, the market place is required to register and collect GST. This is a significant shift in the manner in which GST legislation has been traditionally applied but a necessary evolution of the legislation.

As such, off shore suppliers will be required to register and return GST if their supplies of services to New Zealand-resident consumers exceed the threshold of NZ$60,000 in a 12-month period.

In order to prevent double taxation, where the supplier has paid GST (or its equivalent) in an alternate jurisdiction this payment can be deducted from the NZ GST payable.

GST – Provision of Online Goods and Services

As at 1 October 2016 New Zealand joined a host of nations in applying GST to a broad range of remote services. This type of tax is commonly referred to as the “Netflix tax” and is designed to tax cross border provisions of goods and services which are supplied remotely by non-resident businesses with no physical presence in NZ.

Remote services has been broadly defined and includes online supply of software and digital content such as video and music streaming and online gambling services. The online provision of traditional non digital services are also captured which include insurance, consultancy and advisory services.

The supplier of the remote service will be required to ascertain the residency of a customer by analysing the customers, billing address, the IP address or device or geolocation method, the person’s bank details, the mobile country code or the location of the customers fixed land line or any other commercially relevant information.

The supplier will be required to presume the customer is not GST registered unless the GST registration of a customer can be established by for example being provided with a NZ GST registration number.

Where a supplier operates within a larger platform of suppliers such as an online market place, the market place is required to register and collect GST. This is a significant shift in the manner in which GST legislation has been traditionally applied but a necessary evolution of the legislation.

As such, off shore suppliers will be required to register and return GST if their supplies of services to New Zealand-resident consumers exceed the threshold of NZ$60,000 in a 12-month period.

In order to prevent double taxation, where the supplier has paid GST (or its equivalent) in an alternate jurisdiction this payment can be deducted from the NZ GST payable.

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