In response to the outbreak of COVID-19, Inland Revenue realises that many customers may not be able to meet the 28-day period in s 11(4) of the Goods and Services Tax Act 1985 to export goods at a zero rate.
Ordinarily, a supply of goods is zero-rated for GST if the goods are exported by the supplier within 28 days of the time of supply or a longer period if the Commissioner grants this.
Under section 11(5) of the Goods and Services Tax Act 1985 there is a discretion for Inland Revenue to extend the 28-day period if:
- there are circumstances beyond the control of the exporter and importer which prevent the goods from being exported within the 28-day period; or
- it is not practicable for the exporter to export the goods or a class of goods within the 28-day period due to the nature of the supply.
Normally an application is made to Inland Revenue for the extension.
However, customers affected by the current COVID-19 emergency conditions, so that they are unable to meet the 28-day period, will have a 3 month extension without needing to make an application to Inland Revenue. The three month extension starts on the day the 28-day period expires.
For example, if the 28-day period expired on 1 May 2020 then the extension would be until 1 August 2020.
In the current situation Inland Revenue already understands that many customers will have been unable to comply with the 28-day period because of the emergency conditions and therefore does not need this to be explained in an application.
When the Commissioner will allow an extension relating to COVID-19
A minimum 3 month extension is available to all suppliers who are unable to export their goods within the 28-day period, due to the effects of restrictions put in place as a result of COVID-19, without the supplier having to make an application to the Commissioner.
This minimum 3 month extension, without the need for an application, applies to a supply of goods occurring up to and including 31 July 2020 and will no longer apply for any supplies that occur after 31 July 2020.
Applications will need to be made to Inland Revenue for extensions for any supplies that occur after 31 July 2020, when the person required to export may not be able to do this within the 28-day period that follows the day of the time of supply.
For examples relating to the extension period for zero-rating exported goods please refer to the document ‘COVID-19 – Your Questions answered’ pages 146 150.
Any further extension
Any further extension for more than 3 months can be applied for in the normal way under s 11(5), and will be considered by Inland Revenue.
Please contact us if you wish to apply for an extension beyond the 28-day period, that is greater than 3 months. This will be considered on a case by case basis.
In any request for a further extension we would consider the additional or industry specific circumstances that are beyond the control of the exporter and importer and which prevent the goods from being exported within the initial 3 month extension period. You will need to keep records to justify any extension.