Taxing Times: Offshore GST provision

Legislation was finally introduced last month providing for GST to apply to the provision of "remote services" and intangibles by offshore suppliers to New Zealand resident consumers.

A "remote service" is essentially a service where it is not necessary for the supplier and customer to be in the same location when the services are supplied. This will include supplies of e-books, music, videos and software bought from offshore sites, but will also extend to non-digital services such as accounting and legal services. Supplies of these services to GST-registered businesses in New Zealand will only be subject to GST where the supplier and recipient agree.

The change is designed to create a level playing field from a GST perspective between domestic and offshore suppliers of these services and intangibles. Currently GST does not generally apply to the supply of services by a non-resident where those services are not physically performed in New Zealand.

Offshore suppliers will only be required to register for, and return, GST if their supplies to New Zealand residents exceed the usual $60,000 threshold. It is proposed that the new rules will apply to supplies made after October 1, 2016, following enactment of the legislation next year.