Amazon tax: GST coming to online purchases

The golden days of not paying GST on overseas goods is over.

The Government will today announce the introduction of GST to purchases made from overseas - a so-called 'Amazon tax.'

Currently shoppers don't have to pay GST if the total amount of GST and duties add up to less than $60. That's because GST is expensive to administer.

"More would be spent on the administration and collection than would be collected in revenue", the Customs website says.

Screengrab from the Customs website.
Screengrab from the Customs website. Photo credit: Newshub.

The tax could be passed along to consumers as a 15 percent price increase. That could mean more expensive clothes on ASOS, and goods from the likes of Amazon and Book Depository.

Local businesses are likely to be pleased with the announcement - they have long complained overseas giants have an unfair competitive advantage.

Currently, all overseas purchases of less than $400 are exempt from GST because of the cost of administering the tax.

Prime Minister Jacinda Ardern told RNZ this morning Government "want to make it fairer, and [it] will be."

In November 2017, Minister for Small Business and Revenue Stuart Nash said the Government would extend GST to all goods purchased overseas. That was followed by some hasty backpedalling, with Finance Minister Grant Robertson stepping in to warn "there's still a lot of work to do."

This morning, Mr Nash will have his moment. He and Custom Minister Meka Whaitiri will make an announcement in a Wellington bookshop. Book sellers in particular have been hit by internet shopping, with Amazon and Book Depository selling the same books for a cheaper price.

The National Government introduced a 'Netflix tax' in 2016, which required foreign companies to levy GST on all digital services sold to New Zealand, such as streaming television, music and gaming subscriptions.

The tax was not extended to physical goods, with National's Revenue spokesperson Judith Collins saying levying the tax on goods is complex.