6 Jun 2018

Revenue Minister grilled over GST on online purchases

4:01 pm on 6 June 2018

In the wake of Australians facing a block by retail giant Amazon over tax charges, a New Zealand minister has acknowledged "a risk" of the decision to impose GST charges.

Online shopping

Photo: RNZ

Changes to GST regulations in Australia, set to kick in from 1 July, have resulted in Amazon blocking access to its global website, redirecting consumers to its local Australian site instead.

The New Zealand government is expected to charge GST on goods purchased online from October 2019 costing less than $400.

It is proposing to collect GST on goods at the point of sale and has already applied GST to digital services from offshore.

Revenue Minister Stuart Nash fielded questions about how the government would enforce the collection of new online GST charges at a parliamentary committee this morning.

Mr Nash told MPs there was "a risk" when dealing with these big international companies, but he was sure they would have their say on the proposed plan in New Zealand.

"I've read what's happening in Australia with interest, but we'll just have to wait and see what happens at the end of the consultation," Mr Nash said.

IRD officials had met with Amazon, said Mr Nash, and it was important to remember New Zealand was not alone in requiring tax to be collected.

"A company the size of Amazon will be collecting either a GST or a VAT or state sales tax, or whatever, for probably every state in America, let alone a lot of the other jurisdictions around the world," Mr Nash said.

"So what we're asking them to do is not put in place a huge software change or do anything that they wouldn't be doing differently already."

But he acknowledged it would not be in the interests of New Zealand consumers if they couldn't access Amazon products.

"It is the reason why we'll keep talking to these large online platforms - Ali Baba has said it's keen to comply," he said.

There are 200 offshore companies registered with the IRD for GST on online services, Mr Nash told the committee.

New Zealand does not have a local Amazon website and Consumer New Zealand said online retailers like Amazon could pull out of the market completely.

"Some overseas companies could realistically see selling into a relatively small market like New Zealand as too much trouble," head of testing Paul Smith said.

"That potentially would leave New Zealand consumers with less choice of product and, most likely due to less competition, higher local prices."

Retail New Zealand said Amazon's decision to block Australian consumers should not affect the New Zealand government's proposed GST changes.

"New Zealand tax policy should be dictated by New Zealand, not by a big global corporate," general manager of public affairs Greg Harford said.

Amazon was already GST-registered in New Zealand and paid GST on all digital products purchased through it.

If Amazon did decide to stop shipping to New Zealand, consumers could still access products through services like New Zealand Post's YouShop, which provided forwarding addresses in the US, Mr Harford said.

Get the new RNZ app

for ad-free news and current affairs