The growth of e-commerce in recent years has led to an increased focus by tax authorities on the taxation of cross border supplies of services and intangibles.

Changes have recently been made to the GST Act and from 1 October 2016, non-resident suppliers must register for and return New Zealand GST on services supplied to New Zealand consumers if they exceed the compulsory GST registration threshold (NZ$60,000 taxable supplies made in New Zealand in any twelve month period)[1].

GST on remote services

While the new rules have been referred to in the media as the "Netflix tax", they are not confined to the supply of digital services only. Instead the rules apply to all supplies of 'remote services'[2] made to New Zealand consumers on or after 1 October 2016. 

As the majority of services supplied by non-residents to New Zealand residents will be 'remote services' for the purposes of the new rules, resident and non-resident suppliers and recipients that have not previously had to consider New Zealand GST will need to consider the implications of the new rules when entering into contracts to acquire or supply services cross-border.

How do the new rules apply?

A key feature of the new rules is that services supplied by a non-resident to a recipient located in New Zealand are presumptively treated as being made to a New Zealand consumer (and therefore subject to GST at 15% once the NZ$60,000 compulsory GST registration threshold is exceeded) except if the recipient of the supply notifies the supplier that it is registered for New Zealand GST and/or provides its GST registration or New Zealand business number to the supplier[3]

Non-resident suppliers must treat recipients as being located in New Zealand if two or more of the following factors support such a conclusion:

  • The person's billing address
  • The IP address of the device used by the person
  • The person's bank details / account used for payment
  • The mobile or landline country code of the person, or
  • Any other commercially relevant information.

Consequences of new rules for non-resident suppliers

Non-resident suppliers of remote services to New Zealand recipients will therefore need to determine:

  • Whether they are making supplies to New Zealand consumers (ie persons who are not GST registered or who do not have a New Zealand business number)
  • If supplies are made to New Zealand consumers, whether the value of those supplies (and any supplies made to New Zealand businesses that the non-resident supplier has agreed to treat as zero rated) has or will exceed NZ$60,000 in any twelve month period.

Non-resident suppliers who make NZ$60,000 or more taxable supplies in New Zealand in any twelve month period will be compulsorily required to register for GST and then return GST in New Zealand at the rate of 15% on supplies of all remote services to New Zealand consumers.

Consequences of new rules for GST-registered recipients of services

With the default position under the new rules being that remote services are treated as being supplied by non-residents to New Zealand consumers, GST-registered recipients acquiring services from non-residents for the purposes of their taxable activity will need to ensure that:

  • They provide details of their GST registration number to the non-resident supplier (or advise the non-resident supplier that they are registered for GST)
  • The non-resident supplier does not then (incorrectly) charge GST on its supply of services.

GST registered recipients that are incorrectly charged GST by non-resident suppliers will not be able to recover GST from Inland Revenue as an input tax credit under the new rules if the total consideration paid for the services (including the GST charged) equals or exceeds NZ$1000.  Instead, GST registered recipients will need to seek a refund directly from the non-resident supplier.

Special rules for non-resident operators of electronic marketplaces

The new rules include specific provision for supplies of remote services that pass through an electronic marketplace before reaching the New-Zealand resident customer.

An 'electronic marketplace' is defined as a marketplace operated by electronic means and includes a website or distribution platform but does not include an electronic marketplace that solely processes payments.

Under the new rules it is the non-resident operator of an electronic marketplace that is generally treated as the supplier of the remote services (and therefore be the person required to return GST) rather than the non-resident supplier. The only exception is where the electronic marketplace provides documentation to the recipient of the supply that identifies the supply as being made by the underlying supplier and not the electronic marketplace operator, and the electronic marketplace operator and the underlying supplier have agreed that the underlying supplier will be liable to return GST[4]

Non-resident operators of electronic marketplaces who are legally only agents but who control the terms and conditions of supply and authorise the delivery of the supplies are therefore likely to be required to register and return GST on supplies of remote services to New Zealand consumers rather than the underlying principal.


Non-resident suppliers who are liable to register for GST will have the choice of returning GST only, or returning GST and also claiming back GST on any New Zealand-based costs they incur in making the supplies of remote services to New Zealand consumers.

Suppliers who opt to return only GST will be able to use a simplified form for returns which will be available from 1 April 2017. This form will only require information relevant to returning GST, such as the amount of supplies of remote services made to New Zealand-resident customers, and the amount of GST being returned.

Irrespective of what option a non-resident supplier selects, as part of the registration process they will be required to provide details relating to their business, location and contact details. They will also be required to provide information about their tax residence and the relevant tax identification number for the overseas jurisdiction.


Given the breadth of the definition of remote service and the presumption that supplies to New Zealand residents are to New Zealand consumer the rules will have implications for many non-resident clients supplying services to New Zealand residents.


[1] Non-resident suppliers may also voluntarily register for GST at any time.  This could be advantageous if, for example, a non-resident supplier of services incurs New Zealand GST on goods or services it acquires in order to make its own supply of services.

[2] "Remote services" is broadly defined to refer to services where, at the time of performance of the services, there is no necessary connection between the place the services are performed and the location of the recipient of the services. 

[3] Non-resident suppliers can, if they choose, treat supplies of remote services made to New Zealand GST-registered recipients as being zero rated, rather than outside the scope of New Zealand GST.  However, non-resident suppliers will generally not be incentivised to do so unless they incur significant New Zealand GST on goods and services acquired to make their supplies of services and wish to recover such GST as an input tax credit.

[4] Where a single supply of remote services passes through more than one electronic marketplace, it is the first operator that authorises the charge or receives the consideration (or if neither of the electronic marketplaces authorise the charge or receive the consideration, the first operator that authorises the delivery of the service) that is treated as the supplier.