With the rise in online marketplace operators, the GST rules have been amended to capture the providers of these online marketplaces. The operator of the marketplace will be treated as the supplier of the listed services and therefore be liable for GST. The underlying supplier will not be liable for GST as they do not usually have a large commercial operation of providing accommodation.

What does this mean for the underlying suppliers?

Suppliers registered for GST will continue to be able to recover GST on their costs through claiming a deduction for input tax in their GST return as per normal. Under the proposed amendments, the underlying supplier will:

• No longer need to account for GST on supplies of listed services sold through electronic marketplaces. This will be the marketplace operators responsibility.
• Be treated as making supplies of listed services to the marketplace operator which are zero-rated
• Include these zero-rated supplies in their GST return provided to IRD
• Be able to claim input tax deductions on the costs they incur in making supplies of listed services through electronic marketplaces.

Marketplace operators will be required to collect GST on behalf of the underlying suppliers regardless of their GST status. For underlying suppliers that aren’t registered for GST, the flat rate credit scheme is used.

Example:

Tommy is a ride-sharing provider through the electronic marketplace Uber. He is registered for GST and notified Uber of his GST registration status. In producing ride-share services, Tommy pays for costs such as fuel, vehicle registration and insurance. These costs can be recovered by Tommy as they include GST.

Under the proposed amendments:

• Uber will collect GST on the supply of ride-sharing service provided by Tommy through Uber
• Tommy recovers GST as he normally did through a GST return. The income he receives from Uber is included in the zero-rated supplies box of his GST return. This avoids GST obligation being incurred as GST has already been collected by the marketplace operator, in this case Uber.

For more information regarding electronic marketplace providers visit New GST Rules for Electronic Marketplace and Ride Share Companies.

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