New Zealand’s new legislation regarding GST on international ecommerce products will come into play this weekend on December 1st.
The legislation introduces the requirement for all international goods purchased and shipped to New Zealand to have the standard 15 percent goods and services tax included in the consumer’s costs.
The existing system sees only items sold into New Zealand online for over $400 subject to GST, which is collected at the border. All goods sold online to Kiwis by foreign companies for less effectively are GST-free, giving overseas retailers a tax advantage against their New Zealand equivalents.
The goal is to increase spending within the New Zealand economy and to support smaller businesses that offer the same goods as big overseas companies.
For a long time, foreign retailers have been able to use the de minimis loophole to avoid paying tax on sales to New Zealand, and consumers were paying customs tax on orders with as little value as $250.
Retail NZ chief executive Greg Harford says, “Retail NZ is pleased that the Government has finally closed the loophole that has allowed foreign retailers to sell into New Zealand without paying GST. This has historically put New Zealand retailers at a significant price disadvantage, and effectively applied a 15 per cent reverse tariff on goods sold by New Zealand firms.”
Harford said he is glad the Government has dealt with the issue and hopes now, New Zealand retailers can be at ease and sell high quality goods alongside excellent customer experience.
Consumers often purchase from international stores and get items shipped to New Zealand as the prices can be lower and some items are only sold via overseas retailers. The change will benefit them by simplifying the purchase process – no more getting shocked with unexpected customs fees – but may generate some pushback if international retailers follow through with threats to cease supplying goods to New Zealand.
Some shoppers may use loopholes such as NZ Post’s YouShop parcel redirection service to bypass GST.
The new legislation may see an impact on New Zealand based Christmas shopping, with the date of implementation set at the beginning of the gift buying period.