GST on Imported Goods – The “Amazon tax”
The Government has announced its intention to introduce GST to low-value imported goods from 1 October 2019. The so-called “Amazon tax” is not a new tax as such, but it is a change to the existing GST rules. The proposal mimics the changes made to the GST rules to make imported digital services subject to GST (dubbed the “Netflix tax”).
Currently, NZ Customs only imposes GST on imported goods costing $400 or more. Customs imposes GST, along with an administration charge and possibly a tariff, at the time of importation. Customs does not impose GST on goods costing less than $400 as the administration cost will outweigh the amount of tax collected.
Under the proposal, Customs will continue to impose GST, tariffs and administration charges on imported goods costing $400 or more. However, for low-value goods (those goods costing less than $400) the obligation to collect GST will fall upon the offshore supplier or, where goods are sold through a market place (e.g. Amazon or e-Bay) or a re-deliverer is used (e.g. YouShop), the obligation may fall on the marketplace or re-deliverer.
The new rules will apply when the good is outside New Zealand when purchased and is delivered to an address in New Zealand. An offshore supplier will be required to register for New Zealand GST when the value of all goods and services they supply to New Zealand exceeds $60,000 in a 12-month period. A New Zealand GST registered person acquiring goods costing less than $400 from an offshore supplier will not have GST imposed, provided the goods are acquired for use in the person’s taxable activity.
For more information on how this proposed change may affect you, talk to your local Findex adviser.