Govt looks at GST on cross-border business deals
Proposed changes will level the playing field for local businesses competing internationally, Revenue Minister Peter Dunne says.
The government is looking at ways of making GST on cross-border business transactions neutral to eliminate added costs it says are hurting businesses.
It has called for feedback on an IRD discussion document released today.
“GST is a tax on consumption and should be a neutral tax for businesses, whether they are resident or non-resident," says Revenue Minister Peter Dunne.
"By addressing the current limitations on non-resident businesses claiming back New Zealand GST, we can help level the playing field for local businesses as they compete internationally,”
Mr Dunne says he is aware of cases where New Zealand’s GST represents a real cost to non-resident businesses significantly compromising New Zealand companies’ competitiveness in global markets.
“For example, the aviation training industry provides training services to overseas airlines. As the GST is a business-to-business cost, the outcome under the proposals in the discussion document would allow the overseas entities to register and claim back the GST,” Mr Dunne says.
The discussion document looks at changes that could be made to the GST system that would move towards non-resident businesses being treated in a similar way to their New Zealand counterparts.
Deloitte tax partner Allan Bullot said the proposals announced by Mr Dunne could go a long way to reducing GST problems faced by non-resident businesses wanting to trade with New Zealand.
“There has been increase in situations recently where foreign businesses have ended up paying too much GST when they have been seeking to do business in New Zealand,” Mr Bullot says.
“Frequently it is the New Zealand based businesses that ultimately bear that increased GST cost at an economic level, so the proposed changes to the GST laws should increase the competitive standing of New Zealand businesses. GST should not be a cost in most business to business transactions, as the tax is designed to only be borne in final sense by private consumers.
Niko Kloeten
Tue, 23 Aug 2011
Tue, 23 Aug 2011
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Govt looks at GST on cross-border business deals
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