Starting October 1, foreign companies that sell products to Kiwi customers will have to start collecting GST on all products under $ 1,000, under a new law that should be passed.
Under the current rules, GST is not generally levied on imported goods valued at $ 400, but new laws have been debated since the growth of the e-commerce industry.
This leaves online shoppers wondering which items are worth ordering on foreign websites such as Amazon, Alibaba and eBay.
At the moment, for example, if a consumer bought books via Amazon for $ 60, shipping included, customs fees would be removed. However, if they bought a $ 621 Coach Bucket handbag on eBay, including the US $ 86 shipping fee to New Zealand, they would be caught up in other costs. .
The total bill would have generated additional costs, including fees estimated at $ 26.75, $ 84.26 for GST at 15%, $ 12.90 for GST on freight and $ 52.67 in registration fees. .
This represents an additional $ 176.58 after the purchase of the bag along with the shipping costs, for a total of $ 797.58. The same bag bought at the Coach store in New Zealand costs $ 770, so the consumer would actually save $ 27.58 by buying in the home market, which is exactly the purpose of the GST.
The proposed tax increase aims to protect local businesses by imposing the same threshold on foreign companies as domestic firms.
Revenue Minister Stuart Nash said that many New Zealand small businesses compete with foreign companies that sell exactly the same products in our market without collecting the GST.
“National companies have long called for greater fairness in dealing with low-value goods from foreign retailers,” Nash said.
“With the steady growth of online purchases from foreign suppliers, a significant portion of tax revenue is also lost.
“It’s mostly about equity. The sooner we get this result, the better. This measure aims to level the playing field and improve the integrity of our tax system. ”
However, some retail giants believe this decision would reduce New Zealanders’ access to a competitive market.
Amazon’s Matt Levey, who is responsible for the local public policies of the shopping giant, recently wrote a joint letter to Parliament’s Select Committee on Finance and Expenditure and other major retailers such as eBay and Alibaba.
Levey wrote that Amazon “feared that an unworkable GST collection model could harm New Zealand consumers by potentially reducing access to competitively priced products from foreign markets,” as reported in Stuff.co. nz.
However, the increase in taxes does not seem to bother all greedy online shoppers. Westpac’s customer, Camellia Yang, is dedicated to sites such as Shopbop, Farfetch, Ssense, Tmall and the brand’s official websites.
“I use these websites for items that I do not find locally in New Zealand or for specific sizes, colors, and styles that are not available here,” Yang said.
“I mainly buy clothes, shoes and sometimes gifts online and I like using these sites so much to get exactly what I want, that I will continue to use them even if taxes increase,” she added. .
The debate on the GST increase for foreign companies will be discussed again on June 11 in Parliament before the final decision is made.
New Zealand Customs says it encourages all those who buy goods abroad to consult their online rights estimator to find out about costs, as well as prohibited and limited items before buying online .
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