Fortune Manning Review the New Zealand 'Amazon Tax'

Fortune Manning have a look here at the New Zealand ‘Amazon Tax’. Revenue Minister Stuart Nash said the government plans to close a loophole that allows people to buy low-cost items from abroad without paying the 15 percent tax imposed on goods sold in New Zealand stores.

The current system allows consumers to buy goods worth up to 400 New Zealand dollars ($280) from international online retailers, without having to pay tax. That was based on the idea that it would cost more for New Zealand agencies to collect small amounts of tax than it would generate in revenue. But online sales have been growing at an annual rate of approximately 18 percent in the past five years.

Under the proposed plan, it seems that the onus would fall on companies like Amazon to impose and collect the tax. Offshore suppliers would be required to register, collect, and return New Zealand GST on goods valued at or below $400 supplied to New Zealand consumers. The rules would apply when the goods are outside New Zealand at the time of supply and are delivered to a New Zealand address. Offshore suppliers would be required to register when their total supplies of goods and services to New Zealand exceed $60,000 in a 12-month period. In certain circumstances, marketplaces and re-deliverers may also be required to register. Tariffs and border cost recovery charges would be removed from goods valued at or below $400.

The current processes for collecting GST and other duties at the border by Customs will continue to apply for goods valued over $400. The current border processes for managing risks in relation to imported goods, including biosecurity assessment, will remain in place.

The main issue is going to be the way the GST is collected and that detail is critical as collection costs may negate the overall revenue generation as touted by the revenue minister.

It would be prudent that collection should follow the same process as the “Netflix Tax” but the ecosystem of online retailers is very different to that of service providers and Fortune Manning say they await further information in that regard.

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