There’s no GST on exports, right?

Wrong! Sometimes GST does apply to exports.

Here’s an example:

NZ Ltd agrees to sell products to UK Ltd. UK Ltd is going to use the parts in the creation of a sculpture in the UK.

NZ Ltd invoices UK Ltd and receives payment before the parts leave New Zealand. NZ Ltd delivers the parts to UK Ltd’s agent in New Zealand who uses them in initial design and fabrication of the sculpture in New Zealand.

UK Ltd’s agent then organises shipment of the partially completed sculpture at UK Ltd’s expense.

NZ Ltd wants to “zero rate” the sale of the parts to UK Ltd because they are exported and UK Ltd has bought them to use overseas. UK Ltd also wants the sale to be zero rated because they are not registered for GST in New Zealand and therefore couldn’t claim a refund of the GST. Will the IRD allow NZ Ltd to zero rate the sale?


Even though exports as a general rule are not subject to GST, with some commercial arrangements that is not the case. The scenario outlined above is one example. In that case the IRD would be quite justified in insisting on having GST paid on the sale.

And so held the Taxation Review Authority in a decision released on 5 August dealing with almost identical facts.

Zero rating does not apply because NZ Ltd did not “enter the goods for export” and did not “export” them. Both are required. One refers to completing the Customs documentation as consignor and the other to the shipment of the goods.

Another problem for NZ Ltd was the parts were actually “consumed” in NZ because they were supplied to UK Ltd who then used them in NZ as part of initial fabrication of the sculpture here before shipping that partially completed sculpture. The product being exported was not the same product sold by NZ Ltd to UK Ltd.

There are lots of traps in the zero rating rules. Be careful.

The case is XX (An exporter) v CIR [2013] NZTRA 04


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