The New Zealand Goods and Service Tax (GST) is levied on physical and digital goods that are traded for consumption within New Zealand. If you have a commercial presence in New Zealand, and your business has a gross income of over NZD $60,000, you must register for GST.
Here are a few important GST rules you should be aware of. For more on the ins and outs of GST, check out New Zealand's Inland Revenue page on GST .
If you run a business in New Zealand or provide sales/services in New Zealand and your turnover for the last 12 months was more than $60,000, you must register for GST. You also need to register if you expect your turnover for the next 12 months to exceed $60,000. Find out more about if you need to register for GST here.
You need an IRD number to register for GST so be sure to apply for one before you get the registration process started.
Starting Oct 1, 2016, merchants selling Digital services/goods from outside NZ to NZ customers will have to collect 15% GST from their customers. Here is a breakdown of the rates:
|NZ Merchant to NZ Customer||Digial or Others||15% GST|
|Non-NZ Merchant to NZ Customer||Digital||15% GST|
|Non-NZ Merchant to NZ Customer||Others||No Tax|
Not all sales are taxable in New Zealand. Your sale is taxable if it falls within one of the following categories:
Services (graphic design, hairdressing, mechanical building, and painting for example)
Products (whether they are physical or digital)
Experiences (such as bungee jumping, skiing, kayaking and so on)
Professional services (such as legal advice, whether from a remote location or within the country)
Certain taxable goods are taxed at 0% rather than the standard 15%. These goods are called zero-rated supplies. If you transact in zero-rated supplies, you won't collect GST from your customers but you will pay GST on your expenses. Find out more about zero-rated supplies here.
Your sale is not taxable in New Zealand if it falls into one of the following categories:
Salaries and/or wages
Non-business related sales (including those related to private recreational pursuits and private items)
GST-exempt supplies (including donated goods, financial services and interest). Find a full list of GST exempt supplies here.
IR regulation mandates that you issue tax invoices for sales over NZD $50. A tax invoice must contain the following information:
Name and address of the supplier
The words "tax invoice"
The supplier's GST number
The date of issue
The name and address of the recipient
A brief description of the goods and/or services supplied
Amount, excluding tax,charged for the supply
Total amount payable (including GST)
A note stating that the total amount payable includes GST
Here's how you can configure invoice settings to comply with the requirements mentioned above.
This section will walk you through configuring GST in Chargebee:
Make sure you've added your organization address at Settings > Site info. You cannot configure taxes in Chargebee without completing this step in your initial setup.
Go to Settings > Taxes and click the Enable Tax option.
Once taxes are enabled, you will be redirected to a page containing all the currencies that you have enabled for your site. Step 3 is configuring a price type (the price that you quote for your product/service/addon can be either inclusive of tax, where tax is included in the price, or exclusive of tax, where tax is added to the price) for each of these currencies.
IR regulation calls for the price of your product to be inclusive of GST. Choosing a tax inclusive price type here will ensure that GST is always included in the final price shown in the invoices.
If you are selling to New Zealand in a different currency, check out how to configure price type for a region so your invoices are aligned with regulation here.
If you are selling to customers across around the world and would want to charge them the same price for your product regardless of the taxes applicable as per the customer's location, use the Consistent Pricing option.
This option allows you to have a flat-rate charge for your product or service, regardless of the taxes applicable and the customer's country/region. This means that no matter what tax rate is applicable for a sale, the final invoice amount for your product or service will be the same.
Further customization within consistent pricing:
What happens to your tax-inclusive consistent price when selling to customers residing outside your taxable region or countries where you haven't registered for tax?
Enable this option if you would like your consistent price to apply to them as well. In this case, tax will not be applied and the price will be shown as a whole.
What happens to your tax-inclusive consistent price when selling to customers who are tax exempt?
Do not enable this option if you would like your consistent price to apply to them as well.
Click on Add Region and select ‘New Zealand' from the region list.
You will now be redirected to a GST configuration page.
Enter your tax registration number (the GST number assigned to you when you registered - this may be the same as your IRD number) and your Tax Registration Label (GST) here.
GST regulation calls for your GST number to displayed on your invoices. You can enable your tax registration number to be displayed at the Invoice customization page.
Enable or Disable Location validation based on how you want to collect and store your customers' address proof.
As per IR regulations, you need to ensure that the customers or businesses you are selling to are, in fact, residing in New Zealand. Your customers are required to provide two non-conflicting pieces of evidence that indicate the same. The following count as valid pieces of evidence of residence:
Your customer's billing address.
The internet protocol (IP) address of the device that your customer is using.
The customer's bank details, including information of the account your customer is using for payment.
The location of the customer's fixed land line through which the service is supplied to them.
From the list mentioned, Chargebee uses the following to collect, validate and store location information.
Customer's IP Address:
Hosted Pages If you have integrated with Chargebee using the hosted pages, the IP Address of the customer will be collected automatically.
API If you use the Chargebee API, you will have to pass the IP Address of the customer to Chargebee using the User Details Header API.
Card BIN of the Customer:
The first six digits of a card constitute the Bank Identification Number (BIN). BIN gives us the information about the card issuing bank and hence can be used as a way to determine the customer's location.
Hosted Pages If you have integrated with Chargebee using the hosted pages, the BIN of the customer will be collected automatically.
API If you use the Chargebee API, you will have to pass the BIN of the customer using the card [number] parameter in the Create a Customer API.
If the location validation fails, the customer will not be able to complete the order.
Location Validation Failure
If your customer's location validation fails, he will not be able to complete his order. He will receive the following error message:
If a customer signs up for a trial plan which involves no immediate payment, the subscription is created irrespective of whether the location validation was successful or not. The details of the customer are marked with a warning indicating that the location validation failed.
Depending on whether you sell digital or physical products, you will need to provide a label and the tax rate that you would like Chargebee to apply to your invoices. As per IR regulation, you should set your tax rate to 15%.