Lower bar on imports - retailers

Kiwi retailers want a tax loophole closed that means they have to pay GST while many overseas purchases are made tax-free online.

Retail NZ is renewing calls for action, asking the Government to make one of its New Year priorities charging foreign retailers GST on low-value goods sold to Kiwis.

Europe requires companies to register for VAT in different countries.

And Australia is bringing in GST registration for foreign retailers from July.

But New Zealand still allows goods worth less than $400 to come in Gst-free, although duty may apply on smaller purchases which the shopper must pay.

The matter has become more urgent for local retailers as rumours swirl that Amazon is to open a huge warehouse in Sydney, making shipping cheaper for customers in Australia and New Zealand.

In 2015 the Government introduced GST on digital services from overseas.

But Retail NZ’S general manager of public affairs Greg Harfood said that needed to apply to physical goods like clothing and books too.

‘‘New Zealand needs to follow suit as a matter of urgency, because the Government is missing out on revenue, and it makes it harder for Kiwi businesses to compete.’’

Harford said the scale of consumer imports under $400 was huge.

‘‘Two-thirds of all goods sold to New Zealand [shoppers online] come from the 20 biggest global retailers.’’

‘‘If a small shop in Levin or Gore is expected to account for and pay GST, there’s no good reason for the Government to give global mega-retail businesses an easy ride.’’

He estimated that the Government was missing out on additional tax revenue of at least $200 million by not changing the current rules and changing threshold`

Once the Australians had moved, New Zealand would have the highest effective tax threshold for offshore online purchases, Harford said.

Globally, most jurisdictions had a threshold of $20 to $30 in place, not nearly as high as the $400 the New Zealand government has in place.

‘‘There is a simple solution – which is to require offshore companies to register for GST when selling [online] to New Zealanders, so that tax is collected [online] at the time of purchase, and not at the border.’’

Last June retailers accused Customs Minister Nicky Wagner of parking the decision on the tax threshold.

This was because she opted to look instead into different ways of collecting tax effectively for lowvalue imports.

She said Customs would report back in April this year.

If that happened on schedule, a solution may be put in place by the Government for retailers by 2018 or 2019, she said.