Hon Peter Dunne
Minister of Revenue
Dunne: non-resident business GST issues to be addressed
GST is a tax on consumption and not a tax on business and therefore should be neutral for both resident and non-resident businesses, Revenue Minister Peter Dunne said today in announcing his intention to introduce measures to remove GST impediments for non-resident businesses.
Mr Dunne said that there are cases where GST represents a real cost to non-resident businesses when the same cost may be able to be claimed by a New Zealand business as an input tax credit.
“It can mean that our GST system is a hurdle for non-resident companies looking to do business with New Zealand businesses, such as in the case of aviation training services provided to foreign airlines,” he said, adding that it can particularly be the case when countries such as Australia offer more favourable GST treatment.
Another GST issue affecting non-resident businesses relates to costs a New Zealand resident manufacturer passes on to a customer for the creation or modification of tools required to produce specific products.
A New Zealand manufacturer must charge GST on these tooling costs, even if those tools are used to make products that are exclusively exported.
Mr Dunne said he intends to introduce a GST registration system for non-resident businesses to claim back GST and a specific zero-rating rule for tooling costs.
Subject to some tax base protection rules, the registration system would allow non-resident businesses to obtain refunds in a similar way to resident businesses.
These proposals were supported by public submissions to a discussion document issued in August 2011. Mr Dunne said he will seek Cabinet agreement to implement the measures by 1 April 2014.
“Kiwi businesses generally are astute and innovative, providing high quality goods and services. By removing GST as an impediment, this will help level the playing field and allow our businesses to compete for contracts internationally,” he said.
Mark Stewart | Press Secretary | Office of Hon Peter Dunne
Cell +64 21 243 6985