Imported SaaS and offshore consulting services
Pōhutukawa Marketing Ltd is a GST-registered NZ company making only taxable supplies. It pays a US software provider NZD 20,000 for a 12-month SaaS subscription used solely in its NZ business. It also pays a US consultant NZD 30,000 for strategic advice delivered remotely from California. The consultant has no NZ office, employees, or dependent agent, and the contract is not a royalty or copyright licence. The SaaS agreement gives Pōhutukawa a right to access the software, not to copy or modify it. Neither supplier is GST-registered in NZ, and both invoices show no GST. The payments are made in May 2025. Pōhutukawa has not previously imported services and asks whether it must withhold tax or account for GST.
1. What GST treatment applies to the SaaS subscription and the consulting fee?
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Both are imported services. Because Pōhutukawa is GST-registered and the value of imported services exceeds the NZ$1,000 threshold in a 12-month period, it must account for GST under the reverse-charge rules. GST on the SaaS is $20,000 × 15% = $3,000. GST on the consulting is $30,000 × 15% = $4,500. Because the services are used solely for making taxable supplies, Pōhutukawa can claim input tax of $7,500, so the net cash effect is zero. The reverse charge must still be shown in the GST return. The supplier's invoice showing no GST does not remove the obligation.
2. Is Pōhutukawa required to withhold NRWT from either payment?
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No NRWT is required on these facts. The consultant performs the services outside NZ, has no NZ permanent establishment, and has no NZ-source income. The payment is not a royalty. The SaaS payment is also not a royalty because the agreement gives access to the software only, not rights to copy, modify or exploit copyright. If the SaaS agreement had granted copyright rights, the payment could be a royalty subject to NRWT at 15% or a reduced treaty rate. Pōhutukawa should keep the contracts and invoices to support the no-royalty and no-PE positions.
3. What compliance steps should Pōhutukawa take?
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Pōhutukawa should record the imported services in its GST return, include the reverse-charged GST and the matching input tax, and keep the foreign invoices and contracts. It should obtain the consultant's tax residence declaration and confirm that the services were performed offshore. It should also review the SaaS agreement for any copyright or royalty clause. If future payments exceed the threshold or the supplier registers for NZ GST, the treatment may change. Pōhutukawa should document the analysis because the reverse charge is often missed when the foreign supplier invoices without GST.