New Zealand: Implemented second section of Taxation (Residential Land Withholding Tax, GST on Online Services, and Student Loans) Act

On 1 October 2016, the New Zealand Government partially implemented the Taxation (Residential Land Withholding Tax, GST on Online Services, and Student Loans) Bill amending the Goods and Services Tax Act 1985, aiming to apply GST to cross-border remote services provided to New Zealand-resident consumers. From this day on, the GST will be applied to cross-border "remote" services and intangibles provided by non-resident suppliers to consumers in New Zealand. Under the new regulations, non-resident suppliers must register for GST and report it if their total supplies to New Zealand residents exceed or are projected to exceed, NZD 60'000 within a 12-month period. Offshore suppliers must register for GST if their annual supplies exceed NZD 60'000. The Bill includes specific rules for insurance, and gambling services, and defines "electronic marketplaces" broadly to include other approved marketplaces. It proposes that GST not be charged on remote supplies to GST-registered businesses unless zero-rated by mutual agreement. Amendments include flexibility in currency conversions and the option for non-resident suppliers to express prices in foreign currency, with guidelines provided for determining the residency of service recipients. The Bill aims to align with international practices and reduce compliance costs, ensuring enforcement by the IRD.