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Inland Revenue

Tax Policy

Chapter 1 - Introduction

1.1 At present most goods and services bought and consumed in New Zealand are subject to goods and services tax (GST). This includes goods and services imported for consumption in New Zealand. The New Zealand Customs Service is currently responsible for collecting GST on imported goods at the border. However because of the administrative cost, GST is not currently collected on imported goods attracting less than $60 in GST or other levies.

1.2 The advent of the internet and the growth of online shopping has in recent times seen a rapid increase in sales of imported low-value goods. This has consequences for the tax base if consumers are shifting their buying from domestic to offshore retailers. It also places domestic retailers at an unfair disadvantage. This is a problem faced by tax authorities around the world.

1.3 This public consultation document seeks submissions on the design of a system that would require offshore suppliers to collect GST on low-value goods supplied to New Zealand consumers. Offshore suppliers would therefore be required to register for GST with Inland Revenue just as New Zealand domestic retailers are. The offshore supplier registration system would apply to goods valued at or below $400[1] and is intended to address the non-collection of GST on imported goods below the current de minimis.

1.4 Implementing an offshore supplier registration system for collecting GST on low-value imported goods is consistent with recent changes New Zealand has made to deal with the non-collection of GST on cross-border services and intangibles. The cross-border rules, which applied from 1 October 2016, require suppliers of cross-border services and intangibles (including e-books, digital downloads and software) to register and return GST when they supply services and intangibles to New Zealand-resident consumers.

1.5 The system outlined in this consultation document is also broadly in line with recent international developments. In Australia a similar approach will apply to all imported goods valued at or below AU$1,000 supplied to Australian consumers from 1 July 2018. The European Commission indicated in December 2016 that European Union (EU) Member States would use a variant of an offshore supplier registration system to collect value-added tax (VAT) on low-value imported goods from outside the EU by 2021. The EU also currently uses an offshore supplier registration model to collect VAT on intra-EU cross-border supplies of goods.


1.6 New Zealand’s GST system is a broad-based consumption tax, based on the destination principle. This means that all goods and services should be subject to GST when they are consumed in New Zealand. Consistent with this principle, GST should ideally be collected on all imported goods, regardless of value.

1.7 Under the current rules, the New Zealand Customs Service (Customs) collects revenue (GST, tariff duty and cost recovery charges) on imported goods when $60 or more of total duty (including GST) applies. This threshold is known as the de minimis and generally equates to a parcel valued at approximately $400. However, the value of a parcel on which revenue is collected could be as low as $226 depending on whether tariffs are collected.

1.8 The growth of online shopping means the volume of imported low-value goods on which GST is not collected is becoming significant. This indicates that the current settings are not sustainable. In particular, concerns have been raised about the impact that the uneven GST treatment may have on tax revenues and on the competitiveness of domestic suppliers.

Options for collecting GST on low-value imported goods

1.9 There are a number of options for collecting GST on low-value imported goods, based on different points along the supply chain. These are:

  • At the point of sale: offshore suppliers would be required to register for, collect and return GST (“offshore supplier registration”).
  • Between the point of sale and delivery: courier companies and New Zealand Post would collect GST, tariffs and cost recovery charges (“extended status quo”).
  • After delivery of the goods: recipients would pay GST directly to the government after the goods have been delivered (“pay after delivery”).

1.10 In January 2018, the Government asked the Tax Working Group (the Group) to consider options for collecting GST on low-value goods imported into New Zealand. The Group was established to examine improvements in the structure, fairness and balance of New Zealand’s tax system; accordingly, the Government has used the Group’s expertise to consider the merits of potential reforms to the mechanism for collecting GST on low-value imported goods.

1.11 The Group considered all of the options listed above and has recommended the Government implement an offshore supplier registration model for collecting GST on low-value imported goods. The Group considered options to collect GST on imported goods between the point of sale and delivery and after delivery, but recognised that practical concerns mean these two options may not be feasible in the short term.

1.12 The Group’s conclusions are consistent with the findings of the Australian Productivity Commission, who also considered options other than offshore supplier registration to be less feasible at the present time.

New rules for collecting GST on low-value imported goods

1.13 If enacted, the new rules would require offshore suppliers to register and collect GST on all goods (except alcohol and tobacco products) supplied to New Zealand consumers valued at $400 or less.[2] Offshore suppliers would only be required to register if their total supplies of goods and services to New Zealand consumers exceed $60,000 a year.[3] Offshore marketplaces and re-deliverers would be required to register and return GST if supplies made through them meet the registration threshold. Tariffs and cost recovery charges[4] would not be collected on goods valued at or below $400. The existing border processes to collect GST, tariffs and cost recovery charges on imports above $400 will remain unchanged.

Summary of the proposals

Scope of the rules

  • Offshore suppliers would be required to register, collect and return GST on supplies of goods to New Zealand consumers if the value of the goods is $400 or less. Tariffs and cost recovery charges would no longer be collected on goods valued at or below this value.
  • Goods supplied to GST-registered businesses would be excluded unless the offshore supplier decided to zero-rate the supply (this would allow offshore suppliers to claim costs associated with business-to-business supplies).
  • Offshore suppliers would be required to charge GST unless the recipient identified themselves as a GST-registered business or provided their GST registration number or New Zealand Business Number.
  • A reverse charge (that is, when the recipient of the goods accounts for the GST) would apply to GST-registered recipients that use goods for non-taxable purposes (such as private purposes).

Registration requirements and return filing

  • Offshore suppliers would be required to register if their total supplies of goods and services to New Zealand exceed $60,000 a year (the registration threshold).
  • Offshore marketplaces and re-deliverers would be required to register and return GST if they meet the registration threshold.
  • A simplified “pay only” registration system is proposed to minimise compliance costs for offshore suppliers.
  • Quarterly GST filing is proposed for offshore suppliers of low-value goods.

Enforcement, compliance and penalties

  • New Zealand has international agreements with a number of jurisdictions (including our major trading partners) that include “Assistance in Collection” provisions. This means that if a non-resident supplier fails to comply with their New Zealand tax obligations, New Zealand can ask the relevant foreign tax authority to use its enforcement powers to help collect the GST on New Zealand's behalf.
  • The existing penalties and use-of-money interest rules would apply to offshore suppliers as they do to domestic suppliers. In addition, existing penalties would apply to consumers that falsely represent themselves as a business to avoid GST.
  • For the worst offenders, the rules would provide Inland Revenue with discretion to require a consumer to register and pay the GST that should have been returned.
  • Further measures to bolster compliance will be explored, for example a possible joint registration system with other countries (such as Australia) or data matching programmes between tax jurisdictions or government agencies. This might include the sharing of information on registrations with Australia. Another possibility is the sharing of additional information with Customs.

Maintaining effective border risk-management

  • Changes to the GST settings for low-value imported goods need to take into account implications for the way that risks to New Zealand are managed at the border.
  • Importers would still be required to provide information to Customs and the Ministry for Primary Industries to support effective risk and biosecurity assessment on low-value imported goods.

Application date

1.14 The proposals in this discussion document require legislative changes and would apply from 1 October 2019.

How to make a submission

1.15 Feedback is sought on the design of the offshore supplier registration system, including:

  • how the design of the proposed rules could be improved so they are more effective or have lower compliance costs;
  • whether there are any aspects of the proposed rules that would give rise to undue compliance costs;
  • whether there are any practical concerns with the proposed rules that would make them unworkable in practice; and
  • whether there are any concerns with changing the de minimis from a calculation of duty owing to a fixed threshold based on the total value of the goods imported, and whether the proposed $400 threshold is appropriate.

1.16 Send your submissions to [email protected] with “GST on low-value imported goods” in the subject line.

1.17 Alternatively, send your submissions to:

GST on low-value imported goods
C/- Deputy Commissioner Policy and Strategy
Inland Revenue Department
P O Box 2198
Wellington 6140

1.18 The closing date for submissions is 29 June 2018.

1.19 It would be helpful, but not essential, for submissions to include a brief summary of major points and recommendations. They should also indicate whether the authors would like to be contacted by officials to discuss the points raised.

1.20 Submissions may be the subject of a request under the Official Information Act 1982, which may result in their publication. The withholding of particular submissions on the grounds of privacy, or for any other reason will be determined in accordance with that Act. You should make it clear if you consider any part of your submission should be withheld under the Official Information Act and the grounds you consider justify its withholding.


[1] All monetary values in this discussion document are denominated in New Zealand dollars unless otherwise stated.

[2] Unless otherwise stated, references to goods valued at or below $400 are exclusive of GST.

[3] This is in line with the fact that New Zealand suppliers and offshore suppliers of cross-border services are already required to register for and charge GST if they have over $60,000 of taxable supplies.

[4] The existing cost recovery charge of $49.24 charged by Customs at the border comprises two separate departmental levies: an Import Entry Transaction Fee of $29.26 and a Biosecurity System Entry Levy of $19.98.