Retailers Want GST on Online Purchases

September 6, 2012 New Zealand Taxation

online purchasesNew Zealand retailers are calling for the government to amend or scrap its tax free threshold on purchases made outside of New Zealand.

The New Zealand Retailers Association is calling for the government to implement GST or excise duties on purchases made overseas, particularly from online retailers.

According to Louise Evans McDonald, a spokesperson for the Association, overseas online retailers are increasingly offering shipping to New Zealand, and encouraging local buyers to purchase products from outside of the country, robbing the country of tax revenues and reducing economic activity in New Zealand.

She also said that there is a growing number of “forwarding services” which will provide New Zealand shoppers with a US based address and will ship their orders to New Zealand.

Louise Evans McDonald admitted that the Retailers Association had no statistics on the number of New Zealanders using mail forwarding services to purchase goods overseas, but the Association believes that the number is growing.

The Retailers Association is lobbying the government to remove the NZD 400 tax-free threshold that currently applies to all purchases made overseas, as the tax-free limit puts local retailers at a disadvantage compared to overseas providers.

Commenting further, Louise Evans McDonald conceded that it is impractical for the government to abolish the tax-free threshold, as the collection and administrative costs would outweigh the tax revenues realized. She added that “…finding the solution is the key thing, and it is not something we are stopping looking for.”

Photo by The Master Shake Signal