'Amazon tax' may force Alibaba and eBay to close to Kiwis over holiday season

Friday, 5 April 2019

Online shopping giants Alibaba and eBay have warned they may have to temporarily close their marketplaces to New Zealanders if the Government doesn't delay the introduction of its proposed 'Amazon tax'.

The companies also warned that requiring foreign companies to collect GST on internet shopping sales might result in Kiwis buying more goods from less reputable websites that were less likely to comply with local laws.

Foreign firms would have to levy GST on goods worth less than $1000 that they sold to New Zealanders from October under a law that is expected to be approved by Parliament, with GST on higher-value items continuing to be collected by Customs at the border.

That would change the situation under which most items costing less than $400 can be bought online by Kiwis from overseas tax-free and is intended to create a more 'level-playing field' for New Zealand retailers.

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Retail NZ, which represents Kiwi shop owners, says it would be 'very disappointed' if the Government bowed to pressure to allow one more GST-free Christmas for internet shoppers.

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Alibaba says it could be forced to close in New Zealand temporarily, but says that would be very much a last resort.

Alibaba spokesman James Hudson said Alibaba could be forced to temporarily close services including its AliExpress marketplace to New Zealand shoppers if the Government stood by its original implementation date of October 1.

He said that would be 'an option of absolutely last resort'.

'We would hope to look at a range of options before we got to that point. We would see that as a very bad outcome and we would also seek to put our customers first in that scenario,' he said.

EBay made a similar warning in a joint written submission to Parliament's finance and expenditure select committee, which said both companies could have 'no-option' but to switch off their services to New Zealand until required technical updates could be made.

National Party revenue spokesman Andrew Bayly has signalled it is almost certain to back the Amazon tax, but Alibaba, eBay and Amazon all say they would need months more time to comply.

EBay is among the firms calling for the Government to delay an 'Amazon tax'.

The three firms have said that any requirement on them to levy GST might need to be delayed until at least April next year to give them time to make necessary systems changes, assuming the law change was finalised and passed by Parliament in June in July.

Such a delay would mean one more 'GST-free Christmas' for Kiwi shoppers buying online from overseas.

Appearing in front of the committee, Hudson said there was evidence that Australian consumers had turned to less reputable websites that were skirting its GST rules and other regulations since it became the first country to introduce an Amazon tax in July.

'We are concerned that merchants will be driven towards alternative sales platforms which either do not comply or are less visible and cooperative with New Zealand regulators than AliExpress,' he said.

Larger marketplaces such as AliExpress and eBay maintained a dialogue with 'biosecurity and consumer agencies' in New Zealand but smaller sites provided 'far less visibility for regulators', he said.

EBay's global head of indirect taxes, Anitha Chakravarthi, made the same claim with regard to Australia.

'What we have seen is there seems to be a move from marketplaces to less trustworthy sites that are not collecting GST,' she told MPs.

Retail NZ spokesman Greg Harford says online giants have enough time to get their systems ready for GST change.

But Retail NZ spokesman Greg Harford said it would be 'very disappointed if the Government was to move the timeframe in response to lobbying by some of these big businesses'.

'This legislation has been well-signalled. These companies are already complying with the Australian regime,' he said.

Harford was 'sceptical' the law change would result in shoppers turning to websites that skirted regulations.

'The well-established brands are going to maintain a strong position moving forward.

'There is always the opportunity for new players to enter the market and as they get bigger they will start complying with all of the revenue rules across both Australia and New Zealand,' he said.

Alibaba's Hudson said the New Zealand law change as drafted would 'violate a fundamental principle of free trade upheld by the World Trade Organisation'.

That was because merchants that sold goods to Kiwi companies through online platforms such as AliExpress would have to charge GST 'from the first dollar of sales to New Zealand'.

But companies that sold direct would only need to charge GST if their total sales to New Zealanders topped the GST threshold of $60,000 a year.

Chakravarthi said eBay was being asked 'to design and implement fundamental changes to our successful 23 year-old global business model within six months'.

'If the final law is only passed in June or July, that would give us only three months to prepare for implementation.'

Amazon's local public policy head Matt Levey said in its written submission that it 'recognised' the Government's objective to create a level-playing field for domestic and overseas sellers.

But he said Amazon was 'concerned that an unworkable GST collection model will harm NZ consumers by potentially reducing access to competitively priced goods from overseas marketplaces'.

Its immediate concern was the 'extremely short implementation period', he said.

'This short time frame is likely to present significant issues not only for Amazon but also for the many thousands of overseas-based suppliers who will be required to collect and remit GST under the model,' he said.

However, Levey's letter stopped short of explicitly threatening to close off Amazon to New Zealanders for any period.