Kiwis set to pay 15% GST on goods costing under $400 bought online from overseas.
The Government's move to collect GST on low-value goods purchased online from overseas is a relief for Kiwi retailers who say it will level the playing field against international competition.
Revenue Minister Stuart Nash this morning announced measures to collect 15 per cent GST on goods bought by Kiwis online from overseas retailers.
The tax will be on any items under $400. Anything above already attracts duties.
Customs currently screens incoming parcels to make sure the right amount of tax is paid on imported goods. Charges of less than $60 in GST and duty are waived, which, depending on the items being imported, could equate to a purchase of goods worth hundreds of dollars.
Retail NZ general manager of public affairs Greg Harford said the organisation was glad to see the Government had committed to collect tax on low-value goods.
"We've had a number of false starts on this," Harford said.
"We are very keen to see the Government move to level the playing field we've been talking about this over many years with many governments.
"Historically, Kiwi retailers both online and bricks and mortar has suffered a real competitive disadvantage with the government tax policy. Both GST and tariffs have not been collected on goods typically worth less than $400 coming into the country, purchased online, and that's just not right," Harford said.
"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.
"Kiwi retailers can now focus on delivering great customer experiences, without suffering a competitive disadvantage."
Kiwi online retailer Mighty Ape also welcomed the move to collect GST but general manager Dylan Bland said he worried some retailers would see it as a silver bullet.
"The new tax may push prices up a little for some of our competitors overseas, which will inevitably help retailers in New Zealand, including Mighty Ape," Bland said.
"I worry for any local retailer who sees this as the silver bullet - a 15 per cent price advantage is not the primary reason Kiwis have changed their shopping habits. It may also have the longer-term impact of forcing some of these offshore retailers such as Amazon into the New Zealand market so they can offset their GST which moves the threat closer to home."
Business Mentors NZ general manager Lisa Ford said the move to collect GST on goods under $400 was great news for retailers and other small Kiwi businesses.
"It makes sense for overseas retailers to pay GST just as local businesses have to, and it's encouraging to see the Government's much-needed support for SMEs in this country," Ford said. "The decision will help small businesses to grow more quickly, creating jobs and wealth across New Zealand."
Lisa Ford, general manager of Business Mentors New Zealand. Photo / Jason Oxenham
Retail consultant Chris Wilkinson said the move was "long awaited" for retailers but it would push prices up for consumers.
"What it will do will be to help people reconsider their purchases and it will definitely even up the playing field and create a much more equal position for retailers," Wilkinson said.
"We [were] an outlier, the only country that hadn't acted on this, and that I think has been the most disappointing thing for our businesses, property owners and anyone involved in the sector."
Wilkinson said the GST collection would be benefit the sector and the economy.
"[The collection] will be useful in helping people reprioritise their spending, it will create some equity around pricing and, long term, it will be good not only for our economy but our society as well."
New Zealand auction site Trade Me said the proposed changes to collect GST on low-value goods would level the "online retail playing field for Kiwi businesses" but company spokesman Paul Ford said he hoped the new regime did not undermine competition in the online shopping and advertising markets.
Closing this loophole will remove the unfair 15 per cent competitive advantage enjoyed by offshore online retailers that Kiwi small businesses have had to face each day before they even open their shop.
"The changes are helpful for our NZ sellers," Ford said.
"We're supportive of the move to collect GST on low value imports, but as always we're keen to see it implemented in an straightforward, effective, fair and practical way."
Xero country manager Craig Hudson said Xero also welcomed the initiative.
"This is a positive move as it levels the playing field for the retail sector and small retailers," Hudson said. "However, it also heightens the importance of having an online presence and we would urge all Kiwi retailers to take this moment to explore the opportunities presented by selling products on a global scale."
Business NZ chief executive Kirk Hope said the move to collect GST from foreign companies would benefit both consumers and retailers.
"It would not mean extra compliance for New Zealand customers, and it would provide some certainty around pricing of imported goods," Hope said.
Booksellers NZ said bookshops and small businesses would be relieved by the announcement.
"Closing this loophole will remove the unfair 15 per cent competitive advantage enjoyed by offshore online retailers that Kiwi small businesses have had to face each day before they even open their shop doors," said Lincoln Gould, CEO of Booksellers NZ.
"We hoped the enactment of the proposed legislation would have been earlier than October next year, but we have been working, along with Retail NZ and others, to have this loophole removed for so long that we are happy that we now have a date."
Hallenstein Glasson Holdings share price was up 70 cents, or 1.5 per cent, after the news broke.
