Non-resident suppliers GST registration IS

IR has issued draft interpretation statement PUB00354, titled “GST – Registration of non-residents under section 54B.”

For those of you that are not aware, section 54B provides a mechanism for those non-resident businesses who are not making supplies to end user consumers in New Zealand, but are incurring New Zealand GST costs for some reason (e.g. sending their team to New Zealand for a conference), to register for GST under a special regime to be able to recover the GST input tax paid.

The draft IS is a reasonable document in my view, to provide a basis understanding of the rules surrounding the eligibility of a non-resident to register under section 54B. The narrative walks the reader through the 7 requirements any prospective non-resident must satisfy before they are entitled to register under section 54B, provides several examples at each step, and a number of flow-charts throughout, to explain the content being discussed.

Some of the key take-aways in my opinion:

• It is really important to understand the contractual arrangement in play – exactly who is the recipient of the supply, where will the supply take place, and who has actually incurred the GST input tax.
   
• The first requirement is that the person is a non-resident as defined and just remember that the definition of ‘resident’ is wider for GST purposes than the income tax definition which most people are aware of.
   
• The recent introduction of the ‘distantly taxable goods’ and ‘remote services’ regimes has certainly reduced the number of non-residents who will be entitled to register under section 54B.
   
• If it is reasonably foreseeable that the end-user of any services provided by the non-resident will be in New Zealand, then I can tell you that it is also reasonably foreseeable that the non-resident will not be able to use section 54B to recover New Zealand GST costs.
   
• Section 54B is not a mechanism for your client to register for New Zealand GST in order to obtain a refund of New Zealand Customs GST levied on goods imported into New Zealand if the supply is to a New Zealand GST registered customer (the supply treated as made outside of New Zealand therefore by s.8(3)). Instead, your client will need to exercise s.8(4) with their customer and register for New Zealand GST under the standard regime.

PUB00354 concludes with a discussion on some administration issues – taxable periods, payment basis registration requirement, cessation adjustments etc.

If you would like to have your say, the deadline for comment is 12^th March 2021.