GST move good for retailers

Adding GST to online purchases will level the playing field for businesses, says Rotorua Chamber of Commerce.

Plans to introduce GST for online purchases will make it a level playing field for all business-owners, the Rotorua Chamber of Commerce chief executive says.

Yesterday Rotorua MP and Revenue Minister, Todd McClay, released a discussion document on the collection of GST for online purchases.

GST: Cross-border services, intangibles and goods contains proposals to require overseas suppliers to register and return GST when they sell services (including online products such as e-books, music and videos) to New Zealand consumers.

It also outlines the way forward for improving the collection of GST on all goods, including low-value imported goods. Chamber of Commerce chief executive Darrin Walsh believed the majority of Chamber members would welcome it.

"For a long time there's been a loophole where you can buy overseas and it doesn't attract GST," he said.

"This is a good thing. It gives our local businesses and retailers a level playing field. In the past it's been easier to jump online and buy goods from overseas and it appears cheaper."

He said the Chamber would look at making a submission when consultation opened and he urged others to do the same.

Mr McClay said it was an "important first step" in dealing with the increasing volume of purchases that should, under New Zealand's tax rules, be subject to GST.

"It is about creating a level playing field for collecting GST and putting New Zealand businesses and jobs ahead of the interests of overseas retailers, but it must be done with the least possible inconvenience to New Zealand consumers."

He said the volume of services, online downloads and goods bought by New Zealanders from overseas suppliers on which no GST was paid was an increasing concern.

"Current estimates put the amount of GST foregone on these purchases at approximately $180 million a year, and growing at around 10 per cent each year," he said.

"That is revenue that would otherwise be available to the Government to help fund essential services like healthcare, education and safer communities in New Zealand."

GST for online shopping

* At present, New Zealanders can buy physical goods tax-free if the duty and GST amounts to less than $60.

* The threshold for paying GST on imported goods is between $226 and $400 - one of the higher thresholds in the world.

* Todd McClay said the proposals were not purely about recouping GST on these purchases but also about fairness to New Zealand-based retailers.

* The Government plans to focus on online services first, and New Zealanders are likely to be paying GST on these by the end of the year.

* The issue of paying tax on imported goods is more complex, and officials will not come up with recommendations for Government until late October.