Big changes to GST. Big opportunities for NZ retailers.
The new GST rules and why they’ll level the playing field.
There’s no denying eCommerce is exploding. Globally it is twice the size it was five years ago. By 2021 it is projected 17.5% of all global retail spend will come from eCommerce.
Up until now the explosion of eCommerce has sometimes favoured international retailers. Customers report a preference for purchase from NZ based websites*, but price is king, so they’re shopping around for the best deal offshore. Why support local brands and pay GST when you can avoid that 15% tax by ordering the same or a similar product?
From December 1 2019, that advantage will disappear with GST payable on goods purchased offshore coming into effect. Customers will be more likely to opt for the local customer service and faster delivery times that come with shopping at local sites. A great boom for the NZ economy, just in time for the busy Christmas shopping season.
“NZ Post has been tracking online shopping activity both local and offshore and while NZ consumers indicate they’d like to shop locally, price competition is a big factor. The introduction of GST on goods sourced online via overseas merchants is massive for Kiwi retailers. They’ve already got the edge in customer experience. Now they can compete with a level playing field on pricing too.” Chris Wong, GM, Business Marketing.
|More than 31% of NZ shoppers are buying online with 4 in 10 purchasing from overseas.||35% of New Zealand consumers are influenced by shopping events such as Black Friday and Cyber Monday.||Customer satisfaction levels are higher with NZ based purchases, giving NZ retailers a point of difference to build on.|
Source: Yabble eCommerce Report December 2019 undertaken on behalf of NZ Post Shopper
What you need to know
Before December 1
- International online retailers have been able to offer products at cheaper prices due to goods and services tax (GST) not being applied to purchases. This has given foreign websites selling into NZ an automatic 15% price advantage over local retailers.
After December 1
- Changes to the goods and services tax (GST) from 1 December 2019 will level the playing field with overseas suppliers and help grow local market share.
Goods valued a NZ$1000 or less
- From December 1, overseas businesses that sell goods valued at NZ$1000 or less to private individuals in New Zealand will need to register for, collect, and return GST**. The rules apply to overseas businesses selling low-value goods directly to New Zealand consumers, as well as online marketplaces and re-deliverers.
- The NZ$1000 threshold is based on the customs value of the goods. This means transport and insurance costs are excluded when determining if GST needs to be charged.
Goods valued over NZ$1000
- There is no change to the current processing of consignments over NZ$1000 – the standard GST and duty calculation will be applied. If GST on the value of the goods has already been collected at the point of sale by the supplier, GST will still be payable on any duty at the border.
* Yabble eCommerce Report December 2019 undertaken on behalf of NZ Post Shopper
** Businesses must register for GST if their total supplies, including services, digital products and low value goods, to consumers in New Zealand exceed or are likely to exceed NZ$60,000 in any 12-month period from 1 December 2019