Shop till they block or levy GST
The Australian government may have found a way to force foreign firms to collect GST on goods that Australians order from overseas online. However, it is not clear the approach would work or be welcomed in New Zealand.
Australian consumer organisation Choice said the Australian government could force internet providers to block access to overseas internet shopping sites that refused to collect the tax.
A new law will require nonaustralian firms to levy GST on both goods and services they sell to Australians from July, but doubts have been expressed about how smaller foreign firms that don’t have operations in Australia could be forced to comply.
The Australian legislation goes further than a law change scheduled to take effect in New Zealand at the start of next month, which will only force the collection of GST on imported digital services, such as Netflix subscriptions, Steam games and cloud software.
Here, the Government has stressed the difficulties of extending the same regime to physically-imported goods.
But Choice – Australia’s equivalent of Consumer NZ – said the Australian government could use ‘‘special powers’’ to force internet providers to block access to overseas retailers’ websites if they didn’t play ball with its new law.
It cited an unnamed Australian Treasury official as saying that blocking websites could be a ‘‘last resort’’ justified under a clause in the country’s Telecommunications Act that makes reference to protecting public revenue.
Spark spokesman Richard Llewellyn said it didn’t believe New Zealand’s Telecommunications Act had a similar provision and it would not be in favour of adding one. ‘‘We are opposed to the use of internet providers to police the use of the internet,’’ he said.
Internetnz also balked at the idea of blocking access for tax reasons, saying it was not the right role for tax authorities or internet providers to play.
‘‘Blocking content on the internet at the ISP level is only guaranteed to achieve one thing; it will encourage people to find ways to work around the blocking,’’ chief executive Jordan Carter said. ‘‘New Zealand law does not provide for blocking sites like this,’’ he added.
The Australian GST law will apply to foreign business that sell more than A$75,000 (NZ$77,000) of goods or services to Australians each year.
In New Zealand, the annual cap for the ‘‘Netflix tax’’ on sales of digital services will be set at $60,000.
The task of persuading foreign firms to collect GST on digital services is easier than for physical goods.
That is because only about 100 or so foreign firms are expected to be caught in the net in New Zealand and there is no risk of ‘‘double taxation’’.