New Zealand Customs’ position changing on Temporary Import Entries – a petition for sensible policy

New Zealand Customs have recently changed their position on the sale of vessels in New Zealand under TIE (Temporary Import Entry) which could have potentially significant impacts for yacht owners wanting to bring their vessels into New Zealand, including for marketing and sale purposes.

Conventionally, a TIE is issued in favour of a vessel with a demonstrable foreign owner and allows the vessel to enter into New Zealand on a duty and GST free basis for up to 24 months. Customs has a wide discretion to investigate the ownership of a vessel and impose conditions on the TIE; however it is normal that vessels cannot be marketed for sale or sold without permission first being obtained from Customs. Where a yacht owner has contacted Customs in the past advising them of an intent to sell the vessel, Customs have previously readily issued a permission to sell the vessel on the condition that the buyer exports the vessel within 60 days of purchase or imports the vessel into New Zealand. This scheme has been instrumental in allowing vessel owners to come to New Zealand for legitimate cruising and refit purposes, then sell the vessel to a new owner who can either import or export the vessel, without the seller having to first import the vessel and pay duty and GST.

Recently however Customs have revised this policy and are changing the way they process the sale of vessels under TIE. Rather than permitting sales subject to the import or export of the vessel within 60 days of the sale being completed, Customs has been requiring TIE holders to first import the vessel prior to listing it for sale, requiring the upfront payment of 15% GST on the recorded value of the vessel. This would have significant implications for New Zealand’s yacht sector, as this revised policy position serves as strong disincentive for foreign owned yachts to visit New Zealand where the owner is considering selling the vessel while they are in New Zealand waters.

Dawson and Associates are concerned that this decision by Customs will have a chilling effect on foreign yachts applying for TIEs and disincentivise visits to New Zealand for cruising and refit purposes as the potential exposure to duty and GST is too high.

These changes have been applied in a largely unannounced and unconsulted manner, leaving many TIE vessel owners in a position of uncertainty regarding their exposure to duty and GST; meanwhile yacht brokers and companies engaged in yacht refits are highly concerned about what the potential reduction in yachts visiting under TIEs will mean for their cashflow and business going forward.

New Zealand’s yachting industry is aware of these potential chilling effects and a petition has been launched to address these changes by Customs. It is important for Customs to be made aware of the potentially huge impact this decision will make on all levels of the New Zealand yachting sector, and for a nuanced policy position to be adopted to allow vessels to arrive in New Zealand under a TIE to take advantage of duty and GST free transactions, and to be sold to foreign buyers without incurring importation fees. Vessels sold to foreign buyers are often kept in New Zealand for upgrade and customisation work, but if a policy of requiring importation is retained and imposed, New Zealand will likely see a drop in the number of foreign vessels visiting New Zealand for cruising and refit work.

The petition is available on Change.org and Dawson and Associates encourages you to sign it to show your support for the New Zealand marine industry and a sensible policy regarding the duty and GST free status of vessels sold in New Zealand under TIE.

Dawson and Associates are experts in vessel importation and structuring matters, including applying for and managing TIEs. If you are looking to purchase a vessel in New Zealand that is under TIE, or want to bring a vessel into New Zealand with a TIE, please contact Peter Dawson on +64 27 229 9624 peter@maritimelaw.co.nz or Troy Stade on +64 27 368 6730 troy@maritimelaw.co.nz.