Retail NZ: global retailers have “unfair” advantage

online, e-commerce, shopping, tabletRetail NZ has called on the New Zealand Government to make the closure of a tax loophole that’s “allowing foreign retailers not to pay their fair share of tax”, when selling low value goods to Kiwis a priority in 2017.

Retail NZ’s general manager for public affairs, Greg Harford, says that the government needs to extend a requirement to register for GST to online retailers of physical goods, following a move to make the practice mandatory for those selling digital services last year.

“The Australians are moving require foreign firms, including New Zealand ones, to register for Australian GST from 1 July next year. New Zealand needs to follow suit as a matter of urgency, because the Government is missing out on revenue, and it makes it harder for Kiwi businesses to compete,” he said.

Harford argues that the government is missing out on hundreds of millions of dollars by not taxing large international retailers, the top 20 of which make up two-thirds of all goods sold to New Zealanders.

“After the Australians move in July, New Zealand will have the highest effective tax threshold for offshore purchases. While most jurisdictions require tax to be paid on imported goods worth more than between twenty and thirty dollars, New Zealand’s threshold for most goods is a whopping four-hundred dollars. This gives foreign retailers a distinct unfair advantage when selling to New Zealanders,” he said.

“There is a simple solution – which is to require offshore companies to register for GST when selling to New Zealanders, so that tax is collected at the time of purchase, and not at the border. The Government knows what is happening internationally, and is aware that the current loophole is impacting Kiwi firms. 2017 is the year when the Government needs to act.”

The Australian government has budget plans to levy a 10 per cent GST on all goods from international online retailers worth under $1000. Legislation is expected to be introduced to the Australian parliament in the next few months, to the ire of Ebay’s global CEO Devin Wenig, who met with Prime Minister Malcolm Turnbull in December last year to lobby against the plans.

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