The NZ government has announced that they will be closing the loophole that allows overseas retailers to sell into New Zealand without applying GST.
This is a welcome decision to Retail NZ who released a statement calling it “fantastic news”, noting that the law as it was gave those selling through foreign websites an uncompetitive advantage over Kiwi retailers.
“GST is supposed to be a universal tax on consumption in New Zealand, but that has been undermined by the steady growth of online shopping and the rise of foreign websites selling into New Zealand,” says Retail NZ public affairs general manager Greg Harford.
“The previous Government dithered on this issue for many years, and it has seriously impacted New Zealand retail businesses for a long time.
From October 1, 2019, overseas websites selling into the New Zealand market will have to register for GST, just like any other company who wishes to sell goods within New Zealand.
“Small businesses such as bookshops have convincingly argued they are penalised by a system which is badly out of date,” says Revenue and Small Business Minister Stuart Nash in a statement from the Beehive.
“It's particularly difficult for very small shops outside the main centres. Some Kiwi firms are doubly disadvantaged, as online retailers who sell into Australia will soon pay GST to the Australian Tax Office.
“Retail is a tough business. To be successful, retailers need to offer great products, great prices and an outstanding customer experience across both digital and bricks and mortar channels. Today's announcement isn't a silver bullet for the sector, but it does mean that Kiwi retailers can now focus on delivering great customer experiences, without suffering a competitive disadvantage imposed by Government.
Nash goes on to give kudos to the previous government, disagreeing with Harford's implication that they had little to do with this legislation change.
“GST has been collected on services and digital products from offshore, such as streamed movies and music, since 2016. This extends that to goods,” Nash says.
“I acknowledge the work of the previous Government which agreed to a GST Discussion Document in July 2017. It forms the basis of the document released today. The former Revenue Minister Judith Collins got the ball rolling on this and it is a pleasure to complete her work. This is an example of an issue with cross-party support.