Retailers' relief as uncompetitive GST loophole is to be closed

Amazon has often been accused of not paying its fair share of tax

Amazon has often been accused of not paying its fair share of tax

"Some Kiwi firms are doubly disadvantaged, as online retailers who sell into Australia will soon pay GST to the Australian Tax Office", Mr Nash says.

GST is payable on all goods bought in New Zealand, including online purchases such as books bought on Amazon or Book Depository or goods from Alibaba and e-Bay.

"GST is supposed to be a universal tax on consumption in New Zealand, but that has been undermined by the steady growth of online shopping and the rise of foreign websites selling into New Zealand". This is the same threshold that applies to domestic businesses and to offshore suppliers of cross-border services.

"Domestic businesses have long called for greater fairness in the treatment of low-value goods from offshore retailers", Nash said.

The Government will release a discussion document on Tuesday proposing to make foreign firms levy GST on items valued at less than $400 that they ship to customers in New Zealand from October next year. "We are now calling for feedback on a system to register these suppliers for GST".

"I acknowledge the work of the previous Government which agreed to a GST Discussion Document in July 2017".

Public submissions will close June 30 and legislation will then be introduced before the end of the year, he said.

Nash says New Zealand's 26,000 small businesses are in competition with foreign firms that enjoy this tax break.

"What it will do will be to help people reconsider their purchases and it will definitely even up the playing field and create a much more equal position for retailers", Wilkinson said.

The group recommended an offshore supplier registration model to collect GST, although Cullen said there was a risk GST wouldn't be collected by unregistered sellers. The changes will take effect from 1 October 2019. Revenue officials conservatively estimate that $53 million would be collected in 2019/20, increasing to $78 million in 2020/21 and $87 million in 2021/22.

Customs will continue to collect GST at the border on goods valued at more than $400.

Whaitiri says it is too expensive for Customs officials to collect GST at the border on goods that cost less than $60.

However, that did not impact on purchases of goods from overseas which were worth less than $400 until now. We propose making offshore suppliers collect GST on low value goods at the moment of sale, and in turn, buyers of these goods will no longer pay Customs tariffs or border security and biosecurity fees. "This supports the focus of Customs to make cross-border transactions easier without compromising the need to keep out illicit substances and materials", says Ms Whaitiri. Switzerland will also introduce an offshore supplier registration system for the collection of VAT on low-value goods from 1 January 2019. Other countries such as the United Kingdom and Canada also have a de minimis that is significantly lower than New Zealand's de minimis - the threshold at which revenue is collected. All domestic retailers have GST added to the price tag of their goods.

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