UPDATED GST GUIDELINES FOR ONLINE MARKETPLACES
Overview of the 2024 GST Adjustments
As of 1 April 2024, online marketplace operators registered for GST in New Zealand must implement significant regulatory changes. These operators must collect and remit a 15% Goods and Services Tax for all eligible services transacted within the country. The objective is to align the tax system with the digital economy's dynamics and improve the efficacy of tax collections through online channels.
Scope of Impact
The revised regulations will impact a range of operators in the digital marketplace ecosystem, including:
Ride-sharing services: Examples include Uber and Ola.
Delivery services: Such as those provided by Uber Eats.
Accommodation sharing services: Platforms like Airbnb and Bookabach.
These sectors are critical as they represent a significant portion of the transactions conducted through digital marketplaces, necessitating a streamlined approach to tax collection.
If you sell any of these services you must let the platform provider know your GST status. If you are GST registered the platform provider will pay the full amount collected to the IRD.
Unregistered suppliers must also advise the platform provider of your non-registrered status; this will ensure you receive the 8.5% flat rate credit.
For those who are GST registered, the information reported to IRD on your GST returns will change.
Introduction of the Flat-Rate Credit System
A pivotal element of this new legislation is the flat-rate credit system for sellers not GST registered. In this system, marketplace operators charge the usual 15% GST but will redistribute 8.5% back to these non-registered sellers. This initiative acknowledges the GST input costs these sellers face and aims to minimise their administrative burdens. Although these rules appear to impact GST they will also change what can be claimed for income tax no matter your GST status.
For properties advertised using other means (i.e., private websites) the rules get more complicated.
Comprehensive Implications
This strategy intends to ensure fairness in the digital marketplace while supporting the economy and the tax system. Additionally, the new regulations will ensure compliance across domestic and international online platforms engaging with New Zealand's market, foster a more equitable tax environment and keep pace with global digital economic trends.
Visit the Inland Revenue Department's website for more information or contact us.