The Government is proposing to close a loophole that allows large offshore internet firms to avoid collecting GST on goods sold to New Zealanders.
Currently, online retailers based overseas are only required to collect GST on items over $400.
Revenue Minister Stuart Nash and Customs Minister Meka Whaitiri released a discussion document this morning proposing that from October 1, 2019, offshore retailers would be required to collect and return GST on goods valued at or below $400. The rules apply only when the total sales of that business in New Zealand exceed $60,000.
The announcement was made today at Unity Books, an independent bookstore in Wellington whose owner Tilly Lloyd has long campaigned GST to be collected on books sold by online retailers.
“Domestic businesses have long called for greater fairness in the treatment of low-value goods from offshore retailers,” said Revenue Minister Stuart Nash.
The Government has framed the move as levelling the playing field for New Zealand consumers.
“There are more than 26,000 small businesses employing more than 62,000 people in the retail sector. Many are in competition with foreign firms who enjoy this tax break. Local firms compete on an uneven playing field. Large multinationals sell exactly the same product into our market without collecting GST,” he said.
Whaitiri said that the tax would be collected by online retailers.
"GST has always been payable on low-value goods, but it is not cost effective for Customs to collect it when it is $60 or less,” Whaitiri said.
“We propose making offshore suppliers collect GST on low value goods at the moment of sale, and in turn, buyers of these goods will no longer pay Customs tariffs or border security and biosecurity fees,” she said.
The Prime Minister, Jacinda Ardern said that she would be watching to see whether retailers absorbed the increase or passed the increase on to consumers.
“What I’ll be interested to see is whether or not for some of those large organisations, like for instance ASOS, whether or not they are or will increase the cost just for New Zealand consumers because the likes of Australia have been doing this already,” she said.
National leader, Simon Bridges has said he supports the change. Work was done on tightening GST rules under the previous Government and then-Revenue Minister Judith Collins.