Kiwi retailers’ hopes of an easy fix to the internet-shopping GST “loophole” have been dealt a blow after internet giant eBay threatened to bar Australians from cross-border shopping.
Foreign companies will be required to collect GST on items they sell direct to Australian consumers from July, after Australia became the first in the world to push ahead with a such a law change.
New Zealand’s Retail NZ lobby group has called on the New Zealand government to follow suit and tax experts say Kiwi officials will be closely watching the success of the Australian initiative.
But eBay’s managing director for Australia and New Zealand, Jooman Park, said if Australia went ahead with the change, “regrettably, the Government’s legislation may force eBay to prevent Australians from buying from foreign sellers”.
READ MORE: * GST change could encourage Amazon into NZ * GST worries and Amazon’s imminent arrival in Australia hit home
New Zealand last year began requiring foreign firms to collect GST on sales of digital services to Kiwis, such as Netflix and Spotify subscriptions.
But the Government had already warned that following Australia by extending that regime to cover low-value physical imports would be harder.
Generally, items can be bought online by New Zealanders from overseas websites free of tax if they cost less than $400, including shipping, though there is a lower limit for items that also attract customs duty.
Park said Australia’s law change would in fact be “unworkable”.
It was especially problematic for companies such as eBay that acted as an intermediary between buyers and sellers, but which would nevertheless be caught by the requirement to levy GST, he said.
Park forecast that instead of encouraging consumers to buy local, any bar on foreign purchases by eBay would instead drive online trade away from “trusted, cooperating online marketplaces” such as its own, to “the dark parts of Internet”.
Foreign firms and online marketplaces that sold – or facilitated the sale – of more than A$75,000 (NZ$80,000) of goods to Australians each year would be caught by the requirement to collect GST.
Popular British online clothing retailer Asos stopped short of threatening to pull the plug on sales to Australians, but warned that having the new regime in place by July was not realistic.
Carly Cazzolli, Asos’ head of trading for Australia and New Zealand, said the date left too little time to implement and test required changes to retailers’ systems.