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 12.5% 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.
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 12.5%.
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.
Evidence required to
prove products are exported
Scenario 1:
Physical goods are exported overseas by the supplier. The customer
is located overseas.
-
Delivery evidence, for example, bill of
lading showing export by sea, air waybill for export via air.
Packing list or delivery note showing overseas delivery address.
Insurance documents.
-
Purchase order showing overseas
delivery address.
Scenario 2:
Physical goods are exported overseas by the supplier. The customer
is located in New Zealand at the time of purchase.
-
Delivery evidence, for example, bill
of lading showing export by sea, air waybill for export via air.
Packing list or delivery note showing overseas delivery address.
Insurance documents.
-
Purchase order showing overseas
delivery address.
Scenario 3:
Digital products are downloaded by a customer who is located
overseas.
- The customer should make a declaration at the time of the
transaction that they are located overseas and that the products
will be used outside New Zealand. For example, "I declare that I
am not in New Zealand at this time and will not be making use of
this supply in New Zealand" and provide their name and full
address.
- Evidence of payment received from overseas customer. Credit
card information may be a guide as certain credit card number
series may only be issued in New Zealand. However, this process
is changing and is not entirely reliable.
- Email address may suggest that the customer is overseas but
is not final proof as a New Zealand resident can obtain an
overseas email address.
- Internet Protocol (IP) address of the customer - although
this is not final proof that the customer is overseas.
Note: In scenario 3 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.
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