Tax Facts - GST and E-Commerce
Sale of Physical Goods via the Internet
If a GST-registered person sells goods via the internet
and the goods are physically supplied to a customer in New Zealand,
GST is chargeable at 15%.
If goods are sold via the internet and physically supplied to
customers overseas the sales can be zero-rated for GST purposes. It
is important to prove the goods have been exported (entered for
export by the supplier) and sufficient evidence should be held to
prove the export.
Sale of Digital Goods via the Internet
If a GST-registered person sells digital products via the
internet which are downloaded, such as music, software or digital
books, to a New Zealand customer they must charge 15% GST. (These
products are treated as services for GST purposes). The Government
released a discussion document in August 2015 suggesting possible
changes to these rules.
If digital products are sold via the internet and downloaded by
an overseas customer they can be zero-rated but it is important to
prove that the products are "exported" otherwise GST must be
charged.
Evidence required to prove products are
exported
Scenario 1:
Physical goods are exported overseas by the supplier. The customer
is located overseas.
- Delivery evidence, for example, bill of lading showing export
by sea, air waybill for export via air, packing list or delivery
note showing overseas delivery address, insurance documents.
- Purchase order showing overseas delivery address.
Scenario 2:
Physical goods are exported overseas by the supplier. The
customer is located in New Zealand at the time of purchase.
- Delivery evidence, for example, bill of lading showing export
by sea, air waybill for export via air, packing list or delivery
note showing overseas delivery address, insurance documents.
- Purchase order showing overseas delivery address.
Scenario 3:
Digital products are downloaded by a customer who is located
overseas.
- The customer should make a declaration at the time of the
transaction that they are located overseas and that the products
will be used outside New Zealand. For example, "I declare that I am
not in New Zealand at this time and will not be making use of this
supply in New Zealand" and provide their name and full
address.
- Evidence of payment received from overseas customer. Credit
card information may be a guide as certain credit card number
series may only be issued in New Zealand. However, this process is
changing and is not entirely reliable.
- Email address may suggest that the customer is overseas but is
not final proof as a New Zealand resident can obtain an overseas
email address.
- Internet Protocol (IP) address of the customer - although this
is not final proof that the customer is overseas.
Note: In this scenario, as can be seen from the
above list, it is unlikely that only one form of information will
prove that the customer is overseas. It is expected that a
reasonable attempt would be made to confirm the customer is
overseas to support zero-rating. For more information refer
to the E-Commerce and GST section on the IRD
website.
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