The Government has given offshore businesses supplying low-value goods to New Zealand a two-month extension to get systems in order for a new method to collect GST.

Revenue Minister Stuart Nash confirmed Cabinet has agreed to the Finance and Expenditure Committee’s recommendation to extend the start date. The Committee heard public submissions on the Taxation (Annual Rates for 2019-20, GST Offshore Supplier Registration, and Remedial Matters) Bill.

He says the new system to collect GST was due to take effect on 1 October 2019 but it will now come into force on 1 December 2019.

“The Government has agreed to the change in recognition that offshore businesses want to comply with the law but need time to adapt their IT and accounting systems."

“Offshore businesses who supply more than $60,000 of low-value goods per year into New Zealand will pass on GST directly to Inland Revenue," he says.

Mr Nash says the legislation ensures offshore suppliers are on a level playing field with domestic retailers.

"There are 26,000 small businesses in the retail sector employing more than 62,000 people. They are required to collect GST on all sales. The same requirement will now apply to offshore retail giants."

“GST has always been payable on purchases from overseas but administration and collection costs have been prohibitive for Customs. The GST on goods valued above $1000 will continue to be collected by Customs at the border," he says.

Mr Nash says the internet has opened up more markets for global companies.

"But if they want to do business here they must follow the rules like everyone else. We’re not the first country to introduce such a rule and eventually this will be the new reality of doing business,” Mr Nash says.

The Government estimates the tightening of the GST system will collect approximately $126 million in revenue per year by 2022/23.