Plans for applying GST to imported low-value goods would level the playing field between overseas and domestic retailers and help make New Zealand’s tax system consistent with other countries, says BusinessNZ.
Under the proposed plan, from October 2019 offshore providers of all goods into New Zealand would be required to register and pay GST to Inland Revenue.
BusinessNZ chief executive Kirk Hope says New Zealand retailers would welcome the move, and said there would be benefits for customers as well.
“It would not mean extra compliance for New Zealand customers, and it would provide some certainty around pricing of imported goods.”
He said by treating lower- and higher-value goods the same for GST purposes, the scheme would be consistent with the rest of New Zealand’s broad-based, low-rate GST system.
Hope said IRD’s consultation on the proposal would help work through any workability issues with the proposed scheme.
He said the system would take time to develop, with more work needed on policing of overseas providers and their reporting systems for tax collection.
“We have treaty arrangements with other countries that would allow us to request them to collect unpaid GST on New Zealand’s behalf, and we need to develop joint registration and collection systems with those countries.
“Once the system was fully developed, we would achieve a GST system that was comprehensive in New Zealand and aligned with other sales tax systems internationally.”
Retail NZ has welcomed the announcement that foreign websites selling into New Zealand will have to register for GST from 1 October next year.
“For many years, New Zealand retailers have been disadvantaged by the fact that they have to pay GST on sales in New Zealand while foreign websites in direct competition with Kiwi firms do not,” said Greg Harford, Retail NZ’s general manager for Public Affairs. “This systemic competitive disadvantage has been caused entirely by Government tax policy, and it is fantastic news that the new Government is moving to level the playing field.”
Harford said retail is a tough business and to be successful, retailers need to offer great products, great prices and an outstanding customer experience across both digital and bricks and mortar channels.
“Today’s announcement isn’t a silver bullet for the sector, but it does mean that Kiwi retailers can now focus on delivering great customer experiences, without suffering a competitive disadvantage imposed by Government.”
“Retail NZ will be carefully studying the technical discussion paper that Ministers have released today, and is looking forward to resolution of this issue over the coming months,” he added.
