As New Zealand becomes a prominent e-commerce hub for global brands, it's important for US-based companies to familiarize themselves with GST to effectively navigate this growing market. Understanding the intricacies of international tax laws, though challenging, can be a cornerstone of success with new expansion ventures. In this article, we’ll cover everything direct-to-consumer businesses need to know about New Zealand GST, from payment obligations and calculation methods, to registration and compliance options.
GST in New Zealand Explained
In New Zealand, goods and services tax (GST) is a 15% value-added tax applied to most products, including those sold online and imported into the country. Since this tax is ultimately paid by end consumers, it's crucial for US merchants to adjust their website checkout systems to comply with regulations, ensuring accurate application of GST on eligible transactions.
To calculate New Zealand GST, you’ll start by totaling the product's price, shipping costs, and insurance to get the CIF (cost, insurance, freight) value. Next, apply the GST rate of 15% by multiplying the CIF value by 0.15.
Here’s an example of Calculating GST in NZ:
Product price – $82 NZD
Shipping cost – $16 NZD
Insurance – $2 NZD
GST – $15 NZD (CIF Value of $100 NZD x 0.15)
New Zealand GST Rules & Regulations
Non-resident businesses are required to register for GST if their sales to consumers in New Zealand exceed $60,000 NZD (~$36,000 USD) within any given 12-month period. Once registered, brands must charge customers the 15% GST at checkout for all transactions moving forward, including orders valued under the tax de minimis, and remit it to the New Zealand Inland Revenue Department.
For smaller merchants not meeting the GST registration threshold, New Zealand offers a generous duty and tax exemption limit of $1,000 NZD (~$600 USD). Orders valued under this amount will clear free of duties and taxes, including the 15% GST. However, for orders exceeding the $1,000 NZD de minimis, duty and tax are collected during the customs clearance process.
E-Commerce Compliance Options for New Zealand GST
When shipping to New Zealand, understanding and fulfilling the obligation to pay GST is crucial for both legal compliance and ensuring transparent pricing for customers. The Inland Revenue Department has recently increased its focus on GST enforcement for e-commerce transactions, and many US merchants have been advised to register. If your brand has crossed the $60,000 NZD sales threshold, these are your options to become compliant:
- New Zealand GST Registration – You can apply for a tax ID through the New Zealand Inland Revenue website and file your own GST returns, typically every 2-6 months depending on your turnover. Keep in mind you’ll still need to update your checkout process to collect the 15% GST from consumers.
- Passport’s Seller of Record (SOR) Program – By partnering with Passport as your international shipping carrier and enrolling in our New Zealand SOR program, Passport will manage all aspects of GST collection and remittance. This service includes a small administrative fee, calculated as 5% of the taxes collected. For example, on a $100 order, Passport would collect $15 in GST and charge a $0.75 fee for handling compliance.
Here at Passport, we understand the intricacies that come with international shipping, especially regarding import tax regulations. Our Seller of Record Program is designed to give e-commerce brands a simpler way to handle New Zealand GST compliance with a quick and seamless enrollment process. If you’re interested in Passport’s SOR solution, reach out to our team here to get started.
Frequently Asked Questions:
What is New Zealand's GST rate?
The GST rate in New Zealand is 15%. This tax is applied to most goods and services sold or consumed within the country, including imports.
How do you calculate GST for NZ sales?
To calculate New Zealand GST, first sum up the product price, shipping cost, and insurance to get the CIF value. Then, multiply this CIF value by 0.15, as the GST rate is 15%. For example, if the CIF value is $100, the GST would be $100 x 0.15, equating to $15.
What are the GST rules in New Zealand?
The GST in New Zealand is set at a standard rate of 15% and applies to most goods and services sold or consumed within the country. US companies that generate sales in New Zealand exceeding $60,000 NZD during any given 12-month period are required to register for GST. Once registered, this 15% tax must then be collected from customers at checkout for all transactions moving forward and remitted to the Inland Revenue Department.
Who needs to pay GST in New Zealand?
Businesses with imports into New Zealand exceeding $60,000 NZD within any given 12-month period are required to register for GST. This 15% tax must then be collected from customers at checkout for all transactions moving forward and remitted to the Inland Revenue Department. For those who are not registered for GST, any shipments valued at over the $1,000 NZD de minimis tax threshold will require GST payment by the importer at customs.
Do foreign companies pay GST in New Zealand?
Non-resident businesses with sales in New Zealand exceeding $60,000 NZD within any given 12-month period are required to register for GST. Once registered, merchants must collect the 15% GST at checkout for all transactions moving forward and remit it to the Inland Revenue Department.
Who is exempt from GST in NZ?
Businesses based outside of New Zealand that import goods valued at less than $1,000 NZD and generate sales below $60,000 NZD in any 12-month timeframe are typically exempt from GST when shipping directly to consumers.
Do you charge GST to New Zealand customers?
US e-commerce merchants with sales in New Zealand exceeding $60,000 NZD within any given 12-month period are required to register for GST. Once registered, you must collect the 15% GST at checkout for all transactions moving forward and remit it to the Inland Revenue Department.
Is it VAT or GST in New Zealand?
New Zealand has a goods and services tax (GST) with a standard rate of 15%.
Is VAT the same as GST NZ?
VAT and GST generally refer to the same type of consumption tax. VAT is the term commonly used in Europe, while New Zealand refers to it as GST. The variations between these taxes comes from the unique regulations each country imposes, including factors like tax rates, items that are tax-exempt, and registration requirements.
What is the e-commerce tax in New Zealand?
In New Zealand, e-commerce transactions may be subject to a 15% Goods and Services Tax (GST), which is applied to most goods and services sold or consumed in the country. US merchants must register for GST if their sales in New Zealand exceed $60,000 NZD within any given 12-month period.