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HomeNEWSNew Zealand’s $235 million retail loophole

New Zealand’s $235 million retail loophole

Retail NZ is calling for the government to fix an off-shore trading loophole which allows foreign retailers to trade into New Zealand without paying GST.

The Australian federal parliament has just passed a legislation to fix a similar problem, and Retail NZ is now calling for the same procedure.

The loophole means New Zealand retailers are missing out on a significant revenue stream as consumers opt for no GST alternatives online.

Greg Harford, Retail NZ’s general manager for public affairs, estimates the loss to be around $235 million per year.

“The same issues arise in New Zealand, where Kiwi businesses face a Government-imposed competitive disadvantage because New Zealand retailers have to pay GST, while those selling to Kiwi consumers from offshore do not.”

Harford states Retail NZ have been contacting the government for over a year, but have yet to make progress regarding the situation, so have taken to writing a formal letter of request.

“We have now written to Government Ministers asking them to commit to moving in tandem with Australia, and requiring foreign retailers to register for GST from 1 July 2018 in the same way that they have already required digital service providers like Netflix to do.”

In a time where retail trade is becoming more unsure of the future, the significant rise in revenue that could come from this change in this protocol could well benefit retailers.

Harford estimates the loss towards the retail trade to hit $972 million by 2027.

“It is time for New Zealand to come into line with international practice on this issue.”

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