Kiwis to pay GST on all online shopping from next year

Overseas websites selling low-value goods to Kiwis online will have to collect GST from customers from next year, Revenue Minister Stuart Nash has confirmed.

Foreign companies, from October 2019, will be required to be registered with IRD to collect GST on all goods valued under $400 - the same way companies are registered to collect GST on digital services such as Netflix and Spotify at the moment.

Overseas retailers will be required to collect GST if their total sales to New Zealand consumers exceed $60,000 per annum. This is the same threshold that applies to domestic businesses and to offshore suppliers of cross-border services.

Revenue and Small Business Minister Stuart Nash announced the proposed change this morning in Wellington, saying the Government was committed to closing the GST loophole to offshore companies.

"Domestic businesses have long called for greater fairness in the treatment of low-value goods from offshore retailers," Nash said.

"Foreign companies are not required to collect GST on goods under $400. We are now calling for feedback on a system to register these suppliers for GST."

Nash said the Government would be accepting feedback on the proposed system to register suppliers for GST collection.

Public submissions will close June 30 and legislation will then be introduced before the end of the year, he said.

"There are more than 26,000 small businesses employing more than 62,000 people in the retail sector. Many are in competition with foreign firms who enjoy this tax break.

"Local firms compete on an uneven playing field. Large multinationals sell exactly the same product into our market without collecting GST."

Proposed changes to collect GST will take effect from October 1.

The Government estimates the proposal will be able to collect $53 million in revenue in 2019/20, $78 million in 2020/21 and $87 million in 2021/22.

Customs Minister Meka Whaitiri said the collection of tax on low-value goods was an extension of the 'Netflix tax', which collects GST on services and digital products from offshore companies.

"GST has always been payable on low-value goods but it is not cost effective for Customs to collect it when it is $60 or less," Whaitiri said.

"GST is collected at the border for goods over $400. We propose making offshore suppliers collect GST on low value goods at the moment of sale, and in turn, buyers of these goods will no longer pay Customs tariffs or border security and biosecurity fees.

"This will simplify compliance and administration costs at the border. This supports the focus of Customs to make cross-border transactions easier without compromising the need to keep out illicit substances and materials."