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E-commerce

New Zealand proposes charging GST on international e-commerce

Foreign online companies selling goods to consumers in New Zealand will soon be required to register and pay GST to Inland Revenue.

The proposed plan will require offshore providers to pay in the same way that domestic retailers do starting October 1, 2019.

Retail organisation Retail NZ, which has been campaigning on this issue for a number of years, said the confirmation from the government on the GST move is good news for New Zealand as a whole, since it will level the playing field.

“The proposal is in line with international practice,” said Greg Harford, Retail NZ’s GM for Public Affairs. “For example, Kiwi retailers selling into Australia already have to pay Australian GST, and low thresholds apply in most other markets.”

“While the solution is not perfect, it is a substantive step forward at delivering a level playing field for New Zealand businesses.”

According to Retail NZ, retailers in New Zealand have been disadvantaged for years 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.

“New Zealand retailers, which employ Kiwis and deliver economic benefit for New Zealand, have long suffered a significant competitive disadvantage as a direct result of government tax policy,” Harford said.

Harford said Kiwi retailers have been paying GST since 1986 while foreign firms selling into New Zealand have long had a free ride from the New Zealand taxpayer.

He said it is good news for New Zealand that the government has confirmed the move will level the playing field.

According to Harford, more than three quarters of all sales from foreign websites come from a relatively small number of large businesses that make more than NZ$60,000 ($55,000) worth of sales in New Zealand, and the average foreign transaction is around NZ$114 ($105) in value.

“Customs Duty is still charged on a number of items in addition to GST when they are imported by New Zealand retailers, and the government’s proposal does not deal with this issue,” he said. “However, it is a significant step forward which will be welcomed by the New Zealand retail and wholesale sector.”

This story originally appeared on sister-site Inside Retail New Zealand.

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