Amazon move suggests tax could run dry
Doubt has been cast over a plan to make foreign firms levy GST on all internet shopping purchases after e-commerce giant Amazon said it would not play ball in Australia.
A New Zealand tax change – which has been expected to take effect in October next year – would end the current situation under which most goods valued at less than $400 can be bought online from overseas tax-free.
Australia plans to become the first country in the world to require big foreign firms to levy GST on all internet sales to consumers, with the law change due to take effect there from July this year.
But Amazon, in a surprise move, said on Thursday that rather than levying and collecting the tax, it would instead block Australians from buying from its overseas websites, which includes its main Amazon.com store.
From July, Australians will only be able to buy goods from Amazon’s Australian store, which opened last year. It offers a narrower range of goods at what are often higher prices and it does charge GST.
Amazon would comply with Australia’s new law by blocking Australians from its overseas stores – but not in the way Australian consumers or governments on either side of the Tasman might want.
Amazon does not yet operate an online store in New Zealand.
That means Amazon could be completely closed to Kiwi shoppers, if the Government pressed ahead with the GST change and Amazon took the same approach here that it has announced in Australia.
Satya Marar, a spokesman for the Taxpayers Union lobby group, said Amazon’s move put the New Zealand Government’s plan in peril.
‘‘If this happens in New Zealand, Kiwis will be denied access to about 500 million products, most of which are unavailable locally.’’
PwC tax expert Eugen Trombitas believed Amazon’s stance should not necessary jeopardise New Zealand’s introduction of what has been dubbed the ‘‘Amazon tax’’.
But he said it would need to be designed the right way, with the interests of electronic marketplaces such as Amazon in mind.
‘‘The design of the rules will be key – rules can’t create unfair burdens on a single stakeholder and need to be easy to comply with. There cannot be a one-size-fits-all approach.’’
The New Zealand Government is still consulting over its proposed GST change, with public submissions due by June 29.
‘‘If this happens in New Zealand, Kiwis will be denied access to about 500 million products, most of which are unavailable locally.’’
Satya Marar, Taxpayers Union