GST for all online shopping

GST for all online shopping

Buying items from overseas looks set to become more expensive from October next year as GST is added to all online purchases.

Overseas retailers selling items of less than $400 to Kiwis online will be required to collect GST in the same way they are registered to collect GST on digital purchases such as Netflix and Spotify which came into force last year.

Currently GST is collected for items over $400 at border entry along with any import duty and customs fee. This will not change.

The GST charge will level the playing field for local retailers struggling to compete against foreign firms that have a 15% tax advantage.  The Government’s coffers will also swell with net worth forecast by revenue minister Stuart Nash to be about $90 million although most tax experts predict the real sum to be at least $200m.

As with digital sales, small foreign companies that sell less than $60,000 of goods to Kiwis each year won’t have to charge you GST. But large foreign sites such as Amazon, Alibaba and e-Bay are expected to comply.

To make the new rules simpler and ease transactions at border entry the Government is planning to get rid of import duties and Customs and biosecurity fees for items less than $400 where they currently apply.

Goods in this category are typically shoes, clothes and jewellery which attract duty of either 5 or 10 percent.

This means albeit only in a few cases items could in fact be cheaper because only GST would be payable, levied by the seller at point of sale. Overall the measure is seen as fair; digital goods are already taxed and local retailers are optimistic it will bring back the foot traffic or boost their own on-line presence.