GST on offshore purchases unlikely to affect how Kiwis shop - retailers

Retailers don't expect the new GST rules to significantly affect how Kiwis shop.

From Sunday, offshore businesses that sell directly to Kiwis over the internet will have to collect and pay GST on purchases under $1000, if they do more than $60,000 of business each year here. 

"The legislation ensures offshore suppliers are on a level playing field with domestic retailers," Revenue Minister Stuart Nash said in June when the new rules were unveiled.

"GST has always been payable on purchases from overseas but administration and collection costs have been prohibitive for Customs. 

"The internet has opened up more markets for global companies but if they want to do business here they must follow the rules like everyone else."

Retail NZ chief executive Greg Harford told The AM Show on Thursday it won't "engender a huge shift in the way people shop", but was necessary to "level the playing field".

"There's been a number of years now where Kiwi retailers have been disadvantaged because they've been having to collect and pay tax on behalf of the Government while their foreign competitors don't. 

"Most people will agree that if you've got a tax it should be levelled on everyone who's playing in a market, because that's the only fair way you can manage a tax system - ultimately, it's a question about the integrity of the tax system."

He said online sales have been growing about 16 percent a year, compared to traditional retail's 2 percent. 

"People shop online for a range of reasons - they're looking for brands, they're looking for convenience, they're looking at price obviously. The fact the price will be a little more level than it was will certainly be helpful for Kiwi retailers."

There have been rumours big offshore retailers will cut New Zealand off from Sunday. There have been reports online over the past week, for example, of Amazon's UK shop no longer shipping to New Zealand.

Harford said as far as he's aware Amazon will still be shipping to New Zealand - and even if it doesn't, there are ways around it. Services like NZ Post's YouShop allow Kiwis to buy goods as if they're based in the UK or US, which then ships them to New Zealand. But from Sunday it too will start charging GST, since the retailers won't be. 

"With the growth of eCommerce, NZ businesses are at a competitive disadvantage compared to offshore suppliers, as they are required to collect GST on all sales, while overseas retailers aren't," YouShop said.

"These changes will help level the playing field for local businesses."

Greg Harford.
Greg Harford. Photo credit: The AM Show

Amazon-owned subsidiaries such as Shopbop and East Dane have stopped shipping to New Zealand. Amazon cut Australia off when it introduced similar tax rules last year, but let them back in six months later.

GST is currently 15 percent. Purchases over $1000 are unaffected, as they were already subject to GST, often collected at the border.