A study released by the Australian Productivity Commission reinforces the fact that the New Zealand Government should move immediately to make foreign websites register for GST if they’re selling to Kiwi shoppers, says Retail NZ.
GST and duty is not paid on most goods worth less than $400 that are bought by Kiwis from foreign retailers. Retail NZ has strongly advocated for the introduction of GST on these goods under its #eFairnessNZ campaign for the last several years.
“The Australian Government has legislated to require foreign websites to register for Australian GST from 1 July 2018, but asked the Australian Productivity Commission to consider any other options,” Retail NZ’s general manager for public affairs, Greg Harford, said today. “The Australian Productivity Commission’s report, released today, concludes that registering offshore suppliers is the most feasible option for resolving the eFairness loophole and make foreign e-tailers pay their fair share of GST. The report further concluded that most major foreign suppliers will comply with registration requirements.”
Harford says the Australian findings make it even more urgent for the new Labour-led Government to follow Australia’s lead.
“The current loophole in tax policy means that foreign retailers have an automatic price advantage of at least 15 per cent when selling to New Zealanders – which also means that our Government is missing out on around $235 million a year in tax revenues that could otherwise be used to pay for Government services,” says Harford.
Retail NZ estimates that this loophole will cost New Zealand’s government around $5.8 billion over the next 10 years.
Harford says data from Marketview shows that that nearly 94 per cent of all online shopping by New Zealanders is bought from a small handful of global companies, of which Amazon, Asos and iherb.com are representative.
“These firms need to start paying their way, and it’s increasingly urgent for the New Zealand Government to institute a requirement for foreign firms to register for GST,” he says. “The Government has already required foreign websites to do so when they are selling digital services to New Zealanders, but its failure to address the issue of physical goods creates a disadvantage for New Zealand retailers, who have to charge at least 15 per cent more than foreign websites.
Harford describes the fact that from July 1, New Zealand retailers selling online to Australian consumers will need to pay Australian GST while Australian firms can do the opposite for free as “the ultimate irony”.
Retail NZ is renewing its call for New Zealand Government action to close the eFairness loophole, and is optimistic that the new Government will focus on the issue”.