Amazon moves closer
Online retailer fuels NZ tax debate
Aclampdown on tax-free overseas internet shopping could encourage Amazon to set up a direct presence in New Zealand, Retail NZ admits
The lobby group has long campaigned for the Government to close what it sees as a ‘‘loophole’’, whereby New Zealanders can buy items costing up to $400 from overseas websites free of GST.
But Retail NZ spokesman Greg Harford agreed that if it did get its way, there was a risk for retailers that Amazon could respond by establishing a direct presence in the country with one of its massive warehouses. That would reflect the fact it would no longer have a tax advantage shipping to Kiwis from overseas.
The Australian government will become the first in the world to try to force foreign online retailers to collect GST on all physical items they ship direct to consumers, from July.
In the case of Australia, closing the GST loophole does appear to be coinciding with a move by Amazon to set up stall in the country.
Amazon is believed to be in the process of establishing distribution centres close to all Australia’s major state capitals, with Citigroup forecasting it will take a A$4 billion (NZ$4.3b) annual bite out of the Australian retail market.
A former company executive, Brittain Ladd, has said Amazon should be fully operational in Australia by the end of next year – a little later than it had originally planned.
Amazon is the fourth mostvaluable company in the world and saw its shares top US$900 for the first time this month, after a 50 per cent rise over the past 12 months.
Harford said it was a good
Whether they establish a physical presence in New Zealand or not, they are still going to be able to ship to New Zealand customers from Australia.
question whether Amazon would expand into New Zealand if the government copied Australia’s tax move, but it was a step he nevertheless wanted the Government to take.
‘‘My guess is the physical establishment of Amazon in Australia is not directly connected to the Australian government’s decision around GST.
‘‘Whether they establish a physical presence in New Zealand or not, they are still going to be able to ship to New Zealand customers from Australia,’’ he said.
NZ Customs is due to submit a long-awaited report to the Government on the country’s GST regime this month.
But rather than suggest forcing foreign firms to collect GST on internet sales, it is instead expected to canvass minor tinkering with the threshold at which GST and duty is collected by Customs at the border.
The Government has hinted in the past that it would like to make it easier for consumers to work out whether GST may be payable.
Although most imports only attract tax and biosecurity levies if they cost more than $400, shoppers need to factor-in shipping and insurance costs, and the threshold drops to $240 for some popular items that attract 10 per cent duty, such as clothing, jewellery and shoes.
Labour revenue spokesman Michael Wood said the Government should investigate making foreign firms collect GST on sales to New Zealanders, or alternatively reducing the existing threshold above which it is payable by consumers.
‘‘We are keenly aware of the problem which is significant for New Zealand retailers.’’
But he said Labour was aware that the possible fixes ‘‘aren’t as easy as some people might think’’. Many Kiwis consumers would probably welcome Amazon setting up in the country, he said.