Tax facts – GST and E-Commerce

A general rule of thumb to go by is similar to bricks and mortar. If you are selling a product within New Zealand, the standard GST rate of 15% is chargeable. If you are exporting the goods, either physically or digitally you need to keep proof of destination to allow zero-rating – i.e., no GST charge.

Where it gets murky is trying to distinguish what is acceptable proof when exporting digital goods. If you have further questions talk to us or for more information refer to the E-Commerce and GST section on the IRD website.

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, airway bill 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.

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