Tax experts call for one more tax-free Christmas for internet shoppers

Wednesday, 13 March 2019

Revenue Minister Stuart Nash said requiring overseas internet sites to levy GST was 'only fair' when he announced the tax change in 2018.

MPs have been urged by tax experts to delay the introduction of a law that would require foreign companies to collect GST on internet shopping purchases made by Kiwis from the start of October.

A delay might mean one more 'tax free' Christmas shopping season for online shoppers.

Deloitte tax partner Allan Bullot told Parliament's Finance and Expenditure select committee that foreign companies were being given too little time to prepare for their new obligations, which would involve making changes to software.

Overseas internet retailers are busy and the Government may have to wait until after Christmas to have all its tax wishes granted, experts are warning.

He forecast that some could choose not to sell goods to New Zealand if the Government stuck to its planned schedule.

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The so-called 'Amazon tax' would apply to goods worth less than $1000, with GST on higher-value items continuing to be collected at the border by Customs.

The law will change the current situation under which New Zealanders can buy most items costing less than $400 from overseas without tax, and is designed to 'level the playing field' for local retailers.

But Bullot said that given the law change was not expected to be passed by Parliament until June or July, October was too soon for it to be implemented.

For the tax change to be a success, the Government would need to make it easy for overseas companies to comply, he said.

'These large organisations that work all over the world are telling us they cannot get the budget to change their computer systems until the laws are locked down,' he said.

That was because they had experiences in other countries of laws not coming into effect as originally planned.

'They have seen changes before,' he said.

Bullot said the law should not take effect until at least six months after it was passed, adding that there was 'nothing magic' about the Government's October 1 date.

Large foreign businesses wanted to comply, he said. 'If they can't comply they must just 'switch off' New Zealand.'

PwC tax expert Eugen Trombitas also called for a delay until January or April next year.

Trombitas said he support the move to require foreign companies to collect GST on internet shopping, which he said was 'globally where the trend is going'.

'But we think a bit more time is required to get the overseas sellers comfortable with complying.

'Every business that is selling goods globally is saying New Zealand is in a queue of many countries where systems have to change,' he said.

'We need to extend a bit of goodwill.'

Trombitas played down the suggestion that many foreign firms might suspend sales to New Zealand, however, saying that would be a 'big decision'.

Trade Me, which faces collecting GST on sales made to Kiwis by its foreign traders, told the select committee it would prefer GST on low-value goods to be collected by Customs at the border.

But if the law was passed as planned, October 1 was 'super tight', marketplace head Stuart McLean said.

'We can't realistically start work until details of the regime are confirmed,' he said.