The New Zealand government should move immediately to make foreign websites register for GST if they are selling to New Zealanders, according to industry association Retail NZ.
Retail NZ today welcomed comments by Revenue Minister the Hon. Stuart Nash that the government will “absolutely” move to make foreign websites register for GST.
“For many years, New Zealand retailers have been disadvantaged by the fact that they have to pay tax in New Zealand while foreign websites don’t, even though they compete in the New Zealand market. This is the first time that a Revenue Minister has committed to fixing this issue, and we want to congratulate Mr Nash on his leadership,” Greg Harford, Retail NZ’, General Manager for Public Affairs said.
“While the timeline has yet to be finalised, we are really pleased that Minister Nash is taking the issue seriously, and we urge him to implement a GST registration requirement from 1 July 2018, in line with the Australian Government.
“GST is a key component of government revenue streams, and a GST registration requirement will net the government around $5.8 billion over the next 10 years. Closing the current tax loophole will also mean that New Zealand businesses are no longer disadvantaged by government tax policy.
“The issue is becoming more pressing as online shopping grows in popularity, and as Amazon is about to move into Australia. It’s just not right that Kiwi businesses that employ New Zealanders and keep our communities vibrant are taxed, while massive foreign corporations don’t pay their share of tax for doing business here.”
Pointing to the recently released Australian Productivity Commission, Retail NZ said GST registration is the best option regarding foreign websites.
“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,” said Greg Harford, Retail NZ’s general manager for Public Affairs.
“The Australian Productivity Commission’s report concludes that registering offshore suppliers is the most feasible option for resolving the e-fairness 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.”
According to Harford, the Australian findings make it even more urgent for the new Labour-led Government in New Zealand to follow the Australian lead and require foreign websites to register for GST from July 1, 2018.
“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,” Harford said.
“Over the next 10 years, we estimate that the New Zealand Government will miss out on $5.8 billion because it is not making global giants like Amazon, Asos and iherb.com pay their fair share of GST,” he added.
Harford said data from Marketview shows that nearly 94 per cent of all online shopping by New Zealanders is bought from a small handful of global companies.
“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,” Retail NZ stated.
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.
