CORRECT: Government to impose GST on low-value online retail purchases from October 2019
(Fixes timing in headline, 2nd paragraph)
By Paul McBeth
May 1 (BusinessDesk) - The government plans to impose goods and services tax on small online retail purchases which have
previously been ignored by officials because it was too expensive to pursue, making foreign suppliers collect the tax
and dropping some border duties for the buyer.
Revenue Minister Stuart Nash and Customs Minister Meka Whaitiri today announced the change at boutique Wellington
bookstore Unity Books. From October 2019, GST will be applied on goods bought overseas and valued at less than $400,
ending an exemption that local retailers had complained made them uncompetitive against foreign firms. The new regime
would require overseas retailers to register and collect GST if their total sales to New Zealand consumers was more than
$60,000 a year. The initiative carries on work started by the previous administration and interested parties have until
June 29 to make submissions on the proposal, which would keep the tax treatment of goods valued more than $400.
"Small business such as bookshops have convincingly argued they are penalised by a system which is badly out of date,"
Nash said in a statement. "It's particularly difficult for very small shops outside the main centres."
The government's Tax Working Group was allowed to consider the issue of imposing GST on low-value online purchases and
could make an early recommendation given the train of work already underway.
In a letter to ministers Grant Robertson, Nash and Whaitiri received on Feb. 28, group chair Michael Cullen said the
non-collection of GST was an increasing problem that needed addressing "quickly" as it created a competitive
disadvantage and unfairness for local retailers and an expanding hole in the Crown's coffers.
The group recommended an offshore supplier registration model to collect GST, although Cullen said there was a risk GST
wouldn't be collected by unregistered sellers. The group also supported the government keep reviewing options to collect
GST between the point of sale and delivery, and after delivery.
The new measure is expected to collect an additional $53 million of tax revenue in the 2019/2020 fiscal year, rising to
$87 million two years later, although it isn't clear how much tariff duties and biosecurity fees will fall by. The Crown
collected $152 million from customs duties other than petrol, tobacco and alcohol in the June 2017.
Cullen told ministers officials advised the reduced compliance and administration costs outweighed the foregone tariff
revenue and biosecurity fees.
(BusinessDesk)
ends