Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search


Trading with the US is now more taxing for NZ businesses

26 March 2019

Businesses currently operating in the Unites States or planning to tap into this market should review their tax obligations as the rules are everchanging.

The majority of States throughout America have enforced legislation that allows tax authorities to collect revenue from vendors of goods and services regardless of whether they have a physical presence in the United States or are simply trading via digital channels.

This means that all businesses, both local and outside of the US are obligated to collect and remit sales tax even if their operations don’t comprise physical locations like shops, factories or offices.

“The good news is that specific relief is available in most circumstances when the sales are to customers that are themselves resellers. However, to qualify for this concession, the seller has a duty to record sales accurately and collect any necessary exemption or resale certificates”, says Dan Lowe, Partner, Business Advisory Services at Grant Thornton New Zealand.

“The bad news is that some states have adopted a 1 January 2019 enforcement date, with most choosing dates as far back as 1 October 2018.

“Also, the threshold as to when sales and use tax becomes relevant is quite low in most states. So, businesses may now need to take immediate action if they haven’t done so already. Non-compliance could result in hefty penalties and interest”.

The catalyst for change came by way of the 2018 Supreme Court decision – South Dakota v. Wayfair (‘Wayfair’) which overturned a longstanding precedent requiring sellers to have a physical presence in order for a state to collect sales tax.

During the case, the Supreme Court not only acknowledged that the physical presence rule negatively impacted South Dakota’s tax revenues, but that it “is unfair and unjust to those competitors, both local and out-of-state, who must remit the tax”, recognising that market participants were no longer competing on an even playing field.

Lowe says, “The Wayfair decision has subsequently caused a domino effect across America creating more obligations that previously didn’t exist.

“The changes to how we now do business with one another – for example, via digital channels - mean that the previous laws are rapidly becoming outdated. This is causing tax authorities around the world to put additional measures in place to maintain their tax take.

“There’s a good chance that a lot of Kiwi companies might not yet be aware of these changes; it’s critical that they understand what the thresholds and effective dates are in each state, as well as knowing where they need to file and when”.

A list of the latest thresholds and effective dates, by state, can be found here.

- ends -

© Scoop Media

Business Headlines | Sci-Tech Headlines


Statistics: Consents Remain At Record Levels
There were 47,715 new homes consented in the year ended October 2021, up 26 percent compared with the year ended October 2020, Stats NZ said today. "The year ended October 2021 marks another record for the annual number of new homes consented,” construction statistics manager Michael Heslop said... More>>

Foodstuffs: New World & Four Square Trial NZ’s First Grocery Delivery Offer With Uber Eats

New World & Four Square have partnered with Uber Eats to unlock the first grocery offering available on the platform in Aotearoa. For New World and Four Square it’s yet another way to put New Zealanders first, particularly with those inevitable last-minute grocery needs... More>>

Digitl: Download 2.0 – Vodafone Wi-Fi Calling hits early milestone
Vodafone says it has 10,000 customers using its Wi-Fi Calling service. It took less than three months to reach that milestone; the service began operating in September... More>>

ABC Business Sales: Demand High For Covid-proof Businesses
Despite the continuing challenges facing businesses in this Covid environment, right now there are more buyers looking for a small-medium sized business than there are sellers in the market... More>>

PriceSpy: Producer Prices Increase
New Black Friday and Covid-19 Report* released by PriceSpy says people’s fear of stepping inside physical shops during big sales events like Black Friday has risen since last year; Kiwis are still planning to shop, but more than ever will do it online this year... More>>

NZ Skeptics Society: Announce Their 2021 Awards, And Dr Simon Thornley Wins The Bent Spoon

Every year the New Zealand Skeptics presents its awards to people and organisations who have impressed us or dismayed us, and this year it’s been hard to pick our winners because there have been so many choices!.. More>>

REINZ: Sales Volumes Leveling Out

Data released today by the Real Estate Institute of New Zealand (REINZ) shows there were 44 fewer lifestyle property sales (-2.6%) for the three months ended October 2021 than for the three months ended September 2021... More>>