Tax Facts

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).

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.

Scenario 2:
Physical goods are exported overseas by the supplier. The customer is located in New Zealand at the time of purchase.

Scenario 3:
Digital products are downloaded by a customer who is located 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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