Kiwis set to pay 15% GST on goods costing under $400 bought online from overseas.
New Zealand, a small nation in the South Pacific, has made the bold call that it will force e-commerce juggernauts like Amazon and ASOS to pay GST on products being sold to Kiwis.
It was not immediately clear, however, just how Revenue Minister Stuart Nash would compel a global giant to collect tax from customers if it did not want to do so.
But a spokeswoman for Nash said the Government had ways it could clawback GST from overseas companies.
She pointed to a discussion document, put together by the National government in July last year, on measures to ensure foreign firms comply, which said proposed legislation would be "explored" such as a "joint-registration system with other countries or data matching programmes between tax jurisdictions or government agencies", such as the 'one-stop-shop' registration system which operates in the European Union.
Under the EU system, suppliers are able to register in a single member state, which is then responsible for distributing the GST returned to the other relevant member states.
The document acknowledged this could easily be achieved with Australia.
The Government also had the means to require treaty partners' tax authorities to collect GST and information on its behalf if firms do not voluntarily comply, the document said.
Another way it proposed the collection of GST on low-value goods could be enforced was through data matching programmes with Customs and Inland Revenue.
"Domestically, Customs' import entry information could be matched with Inland Revenue's list of GST-registered businesses to determine whether suppliers who are supplying more than $60,000 of goods a year into New Zealand are registered for GST. Officials consider that this can be efficiently supported by the new customs and excise legislation," the document stated.
New Zealand has made the bold call that it will force e-commerce juggernauts like Amazon to pay GST on products being sold to New Zealanders. Picture / Getty Images
It proposed a fine of $25,000 for first offending and $50,000 for a repeat offender for domestic suppliers who provided incorrect information to avoid paying GST.
The document outlined the current 'Netflix tax', which required overseas firms to file GST on digital services such as Spotify and Netflix, showed offshore registration could be successful.
"A strategy of making it as easy as possible for offshore suppliers to comply with the rules is likely to help maximise compliance with an offshore supplier registration system.
"It has also been the experience in other jurisdictions that have implemented similar rules for cross-border services that offshore suppliers have demonstrated a willingness to comply."
Revenue Minister Stuart Nash says collecting GST from foreign firms selling goods to Kiwi consumers is a matter of fairness. Picture / NZME
Nash said collecting GST from foreign firms selling goods to Kiwi consumers was a matter of fairness.
"Smaller retailers, especially those who operate outside large shopping centres, struggle against foreign competitors who enjoy a tax advantage," Nash said. "All domestic retailers have GST added to the price tag of their goods. The proposed measures will help to restore balance."
The Government estimates the proposal will be able to collect $53 million in revenue in 2019/20, $78m in 2020/21 and $87m in 2021/22.
More than 200 foreign companies are registered with IRD to file GST for digital services under legislation implemented in October 2016. Since then, $162m has been returned in tax.
