The Australian government is currently proposing changes to GST (goods and services tax), “a broad based tax of 10% on most goods, services and other items that are sold or consumed in Australia.” The controversial change in question is the threshold. Currently, the threshold for GST collection on imported goods stands at AU$1000. However, the Turnbull government’s proposals are to lower the threshold to zero. This would mean that whilst Australians may be used to paying GST on luxury good bought online from abroad, they will now have to pay 10% GST on ALL goods bought online. The idea behind the new proposals is that it will level the playing field with bricks and mortar retailers.
Overseas online retailers have said that this could seriously undermine their sales to Australia and could even lead to them avoiding selling to the country altogether, leaving Australians with less choice than they are currently used to.
As is so often the case, the devil is in the detail in the new proposals. In the proposed bill, GST is to be collected by the seller, the “electronic distribution platform” or the “deliverer of the goods.” Ebay, along with other online retail platforms such as Etsy and Alibaba say that this will put them and other large and small businesses at a serious disadvantage because consumers will seek out cheaper options such as those websites willing not to comply with the proposed regulations.
Jooman Park, eBay’s vice president and managing director for Australia and New Zealand said:
“Regrettably, the government’s legislation may force eBay to prevent Australians from buying from foreign sellers. No tax would be paid to Australia and none would be owed. It would raise no revenue, deny Australians access to choice and lessen price competition. This solution would not even represent a win for bricks and mortar retailers, because Australians would still find ways to buy online.
“They would do so direct via dotcoms without paying GST and they would lose the confidence they currently enjoy buying from eBay with the advantage of its trusted seller ratings. This appears to be the most likely outcome at present.”
Leading online fashion website ASOS also hit out at the legislation. Head of Trading for Australia and New Zealand Carly Cazzolli said: “We are concerned that if, complexity and uncertainty are not avoided, then compliance will be needlessly difficult which could have a negative impact on both the success of the legislation and the Australian consumer.”
“There is too little time between the finalisation of the legislation and the proposed commencement date. It seems likely that the new legislation will not be finalised and enacted until May at the earliest, this only leaves one month to implement and test any required changes to both retailers’ systems and those of any third parties involved in the supply chain.”
Amazon, which is soon to launch in Australia has also attacked the new proposals from the Turnbull government.
“The bill imposes an administrative burden on sellers and electronic distribution platforms, which will create an inherent disincentive for them to comply,” its submission says. “It will create, rather than remove, distortions in pricing due to its lack of efficient mechanisms to require registration of vendors, detect non-compliance and ensure collection of GST on goods as they enter Australia.
“While compliant sellers and electronic distribution platforms will charge GST, non-compliant sellers and electronic distribution platforms will be able to ship parcels to Australia at prices that appear more attractive to the consumer, with low risk of detection. This incentivises consumers to buy from less reputable overseas vendors, at increased risk.”
There is absolutely no suggestion that the proposals if successful will change Amazon’s launch plans though.