If you sell digital services or ship goods to customers in New Zealand (NZ), there's a good chance you're expected to charge goods and services tax (GST) – even if your business operates entirely offshore. GST requirements have been in place for a while now, but many international sellers still misunderstand what's required, when registration takes effect and how the system actually works. The GST threshold is lower than you might think, and penalties might be levied if you make mistakes. Below, we'll cover how GST on overseas purchases works in New Zealand and what your business needs to do to stay compliant.

What's in this article?

• What is New Zealand's GST on overseas purchases?
  
• What is the GST threshold for overseas businesses selling in New Zealand?
  
• Which sellers are required to collect GST on overseas sales to New Zealand?
  
• How does GST apply to digital services and online purchases?
  
• How does GST affect customers from New Zealand buying from international sellers?
  
• How do overseas businesses register and remit GST in New Zealand?
  
• What are the penalties for overseas businesses that fail to comply with GST rules?
  

What is New Zealand's GST on overseas purchases?

New Zealand's GST is a 15% tax on most goods and services sold domestically, including those imported from abroad. This includes both:

• Tangible goods shipped to New Zealand: These can include items such as clothing, electronics and homewares.
  
• Intangible services and products: Examples include streaming subscriptions, software and digital consulting.
  

If a New Zealand customer buys the good or service and uses it locally, GST applies – regardless of where the seller is based.

What is the GST threshold for overseas businesses selling in New Zealand?

The GST registration threshold in New Zealand is $60,000 New Zealand dollars (NZD) in taxable sales to New Zealand customers over a 12-month period. That threshold applies equally to both overseas and local sellers.

If you own an overseas business, you're required to register for GST if your taxable sales to NZ customers either exceeded $60,000 NZD in the past 12 months or are expected to exceed $60,000 NZD in the next 12 months. It's a rolling threshold, so it's not tied to the calendar year. As a result, you need to continuously monitor your sales.

Which sellers are required to collect GST on overseas sales to New Zealand?

If you're based outside New Zealand and selling to NZ customers, there's a good chance you're expected to charge 15% GST. The rules are broad, and they apply to more than just traditional retailers. Here are the types of sellers that are typically required to charge GST after crossing the revenue threshold.

Direct overseas sellers

If you're an overseas business selling goods or services directly to New Zealanders – through your website, an app, by phone or otherwise – you need to register for GST and start charging the tax. This includes:

• Online retailers shipping physical products into NZ
  
• Software as a service (SaaS) or software companies selling downloads or subscriptions
  
• Any service provider delivering to NZ-based customers
  

GST doesn't only apply to businesses with a physical presence in New Zealand; it's based on where your customer is located.

Online marketplaces

If a sale of a listed service happens through a marketplace, the platform is responsible for GST. Listed services include ride-sharing and ride-hailing, food and drinks delivery, and taxable short-stay accommodations. Marketplace operators are treated as the supplier in these situations, which means they handle GST collection and filing.

Re-deliverers and personal shopping services

Some businesses act as intermediaries between overseas sellers and NZ customers – for example, a business might provide a local shipping address in another country, receive goods there and then forward the goods to New Zealand. These "re-deliverers" are typically required to charge GST if the original seller hasn't already done so.

How does GST apply to digital services and online purchases?

Since 2016, overseas businesses have been required to charge GST on "remote services" sold to New Zealand residents once they cross the registration threshold. These services include:

• Streaming and digital content: Movies, music and e-books are common examples.
  
• Software and app downloads: These can include cloud-based platforms, mobile games and SaaS tools.
  
• Non-digital services: Examples include legal services, accounting, consulting and general insurance.
  

How does GST affect customers from New Zealand buying from international businesses?

Beginning in December 2019, overseas businesses selling goods valued at $1,000 NZD or less had to begin collecting GST if they reached the registration threshold. Expanding GST to overseas purchases has reshaped the customer experience in New Zealand. Now, regardless of whether the seller is local or international, prices are more consistent, fees are more predictable and the tax burden is more evenly applied.

Before the rule change, overseas businesses didn't have to worry about GST. New Zealand Customs would collect GST for items over $60 NZD, and items under $60 NZD had no GST charged at all. Under these rules, a $50 item purchased from a foreign retailer would have cost $50 flat, while the same item at a New Zealand store would have added GST, bringing it to $57.50. Now, that same overseas purchase also includes GST. That means prices from foreign sellers are a bit higher than they used to be, but it also means there's no longer a tax-based price gap that incentivises shopping with foreign companies.

For items worth $1,000 NZD or less, the seller now collects 15% GST at checkout and the customer pays nothing further at the border. Goods valued at more than $1,000 NZD must still be cleared by customs.

How do overseas businesses register and remit GST in New Zealand?

If your business is based outside New Zealand and crosses the $60,000 NZD annual threshold in sales to New Zealanders, you're required to register for GST. Once registered, you must charge 15% on qualifying sales and file returns with the Inland Revenue Department (IRD). The process is designed to be accessible for non-residents – there's no need for a local entity or agent. Here's how it works, step by step.

Register for GST

You can register online through the IRD tax portal, myIR. Once submitted, IRD processes registrations within 10 working days. If approved, IRD will issue you a GST number, which allows you to begin trading under the NZ GST system.

Charge GST on eligible sales to NZ customers

After registering, you must collect 15% GST on all taxable transactions made in New Zealand. Your checkout system should detect when a customer qualifies as being in the country. Common indicators include:

• The customer's shipping address
  
• The country selection in the customer's profile
  
• The customer's Internet Protocol (IP) address or phone number prefix
  

You can display GST as a line item or include it in a tax-inclusive price. In either case, you must clearly communicate the GST-inclusive total at the point of sale and issue receipts to customers or invoices to B2B clients that show:

• The total
  
• The GST charged
  
• Your GST number
  
• A description of the goods or services
  

Digital-first businesses or marketplaces typically manage this within their payment systems. For example, Stripe Tax can automatically calculate and apply New Zealand GST based on the customer's location and the type of purchase.

File GST returns and remit payment to IRD

As the owner of a GST-registered business, you must file regular returns and remit any GST collected. You can file through the myIR portal.

Each return requires you to report:

• The total value of taxable sales made in New Zealand
  
• The total GST collected on those sales
  
• Any corrections from previous periods, as necessary
  

As a non-resident supplier, you typically won't be claiming input tax credits for the GST your business paid on expenses, which means your GST returns will mostly reflect output tax collected. In most cases, this simplifies the filing process.

Payments must be made in NZD. If you charge customers in another currency, you'll need to convert your totals into New Zealand dollars for reporting purposes.

Once a return and payment are submitted, you're considered compliant for that period. The process then repeats for each subsequent filing cycle.

Keep records for seven years

IRD requires businesses to retain tax records, including invoices and receipts, for at least seven years. These records should be detailed enough to demonstrate the nature of each sale and why GST was – or wasn't – applied.

What are the penalties for overseas businesses that fail to comply with GST rules?

New Zealand treats GST compliance seriously, even if your business operates entirely offshore. If you're required to register and don't, or if you under-report what you owe, IRD can pursue back taxes, penalties and even legal action. Let's take a closer look at the possible penalties for failing to follow GST law.

Failing to pay GST

If you should've been registered but weren't, or if you failed to charge GST on sales where it was required, IRD can demand payment of the unpaid tax. This applies retroactively – potentially all the way back to when you first passed the registration threshold.

Escalating late payment penalties

On top of the tax itself, penalties for late payments escalate fast:

• 1% is added the day after the due date.
  
• A further 4% is added after 7 days.
  
• An additional 1% per month is added for as long as the balance remains unpaid.
  

The longer the delay, the more expensive the problem becomes to solve.

Flat penalties for late GST returns

Even if you're collecting GST correctly, failing to file returns on time is still a violation. A standard penalty of $50 NZD or $250 NZD is charged per late return, depending on your accounting basis. Consistently missing filing deadlines – or not filing at all – can trigger more serious consequences.

Shortfall penalties

If you're registered but under-report GST, whether by accident or design, IRD can apply shortfall penalties based on the seriousness of the error. IRD typically charges:

• 20% of the tax shortfall for a lack of reasonable care
  
• 40% of the shortfall for gross carelessness
  
• 150% of the shortfall for tax evasion
  

These penalties are all in addition to paying off the underlying tax.

Criminal charges

Wilful non-compliance, particularly in the case of fraudulent returns or deliberate evasion, can lead to criminal prosecution. Potential legal consequences include:

• Heavy fines
  
• Court proceedings
  
• In extreme cases, imprisonment
  

At a minimum, a record of non-compliance can prevent access to trusted marketplaces or create reputational issues that block future expansion into the country.

It's advantageous for sellers to come forward if they discover they should have registered or charged GST but haven't. Voluntary disclosure before an investigation begins can help a business reduce or avoid penalties altogether.