Amazon tax for shoppers
The days of being able to buy goods GST-free from overseas websites are coming to an end.
A Government discussion document released yesterday proposes 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.
Foreign firms that sell less than $60,000 of goods to New Zealanders each year would be excluded from the obligation to levy GST.
The proposal would change the current regime under which most consumer items valued at less than $400 can be bought from overseas tax free. A lower threshold has applied to goods that still attract import duty such as clothes and shoes.
Speaking on RNZ, Prime Minister Jacinda Ardern said the changes would be designed to make tax on shopping fairer.
The change will mirror a similar rule being implemented in Australia in July.
Import duty and biosecurity fees won’t be chargeable on any goods costing less than $400, slightly softening the blow for consumers.
Sources clarified GST would not be payable on items costing less than $400 bought from small foreign foreign firms that did not cross the $60,000 annual sales threshold.
The extension of GST to low-value purchases is a victory for New Zealand retailers which have long campaigned for the change, but there could be a sting in the tail for the sector.
Retail NZ policy manager Greg Harford has acknowledged that doing away with the ability for foreign e-commerce giants to sell goods direct to consumers tax-free could tip Amazon into establishing a direct local presence in New Zealand.
Labour has promised not to introduce ‘‘new’’ taxes in its first term, but former revenue spokesman Michael Wood made it clear before the election that this did not rule out extending GST to overseas purchases.
Revenue Minister Stuart Nash and Customs Minister Meka Whaitiri released the discussion document at Unity Books, Auckland, yesterday morning.
Owner Tilly Lloyd has been a vocal advocate for making foreign firms collect GST on the likes of books New Zealanders buy from overseas.
A Cabinet paper prepared by the former National Government also suggested introducing the Amazon tax in October next year.
However, its proposal appeared significantly more generous to consumers as it would have abolished Customs and biosecurity duties on goods worth less than $1000, not just on goods valued at less than $400.
National’s Cabinet paper forecast the tax change would raise about $81 million a year. But tax experts believe the true figure is likely to be in the hundreds of millions.
Robertson said yesterday that the Government was following a global trend with its proposal.
‘‘What we’re doing here is building on work done by the previous government to make sure we create a level playing field for New Zealand retailers. This is now common in other parts of the world.’’