Why is the Government penalising kiwi businesses?
New Zealand is currently seriously disadvantaged by a loophole that means that people do not pay GST or duty on low-value purchases (generally goods less than $400 in value) bought from foreign websites. This creates a reverse tariff of up to 25% which discriminates against Kiwi businesses. We're working hard to level the playing field for domestic retailers, both online and bricks and mortar store owners. We want the loophole to be closed, and for the Government to charge GST and duty on all goods, no matter where they are purchased.
The Government can and should close this loophole now. Delay is costing all New Zealanders; it's threatening our local town centres, closing New Zealand businesses, costing Kiwi jobs, and eroding valuable tax dollars. We want to see eFairness - a level playing field for all retailers, regardless of where they are based.
The Government is missing out on at least $235 million a year in revenue from low value goods. That's a huge amount of tax money - enough to pay for at least 4,996 new first-year primary school teachers, or 10,682 hip replacements every year!
We are asking the Government to close the GST loophole by:
- Requiring overseas companies to register for GST, and collect the tax just like any other retailer does. The Australian Government has announced it is implementing this from 1 July 2017.
- Introducing a $25 threshold for low value goods - where GST and duty has not been pre-paid, this should be collected at the border before the items are released.
- Levying goods worth more than $25 to cover the cost of customs and biosecurity clearance, as happens in most other countries.
Resources for Download:
Letters and Submissions:
- In December 2016, we received a reply to our letter from the Minister of Customs. The Minister's reply does not fill us with confidence that the Government understands the significance of this issue, or that it is looking for pragmatic ways to resolve the problem. Instead, it remains fixated on managing low-value goods AT THE BORDER - which is like looking for the answer to the wrong question. Instead, we think the Government should be following the Australian lead and collecting tax at the point of sale - so goods can flow freely across the border.
- In November 2016, we made a submission to the Australian Treasury in relation to draft legislation to close the fairness loophole in Australia. You can read our letter here.
- In November 2016, we wrote again to the Minister of Customs, letting her know that the Australian Government has confirmed it is implementing offshore supplier registration from July 2017 and urging the Government here to follow suit. You can read our letter here.
- In August 2016, we raised the issue with the Hon. Bill English, Minister of Finance. We followed up with a letter which you can see here [link to pdf]. He didn't reply, but the Minister of Customs did. You can see her reply here.
- In June 2016, the Hon Nicky Wagner, Minister of Customs announced that the Government would not be altering the de minimis until at least 2018/19. This is deeply disappointing and we don't think it's good enough. You can see our response to Ministers here.
- In January 2016, we lodged a submission on the Taxation (Residential Land Withholding Tax, GST on Online Services and Student Loan Bill).
- In August 2015, the Minister of Revenue Todd McClay released the discussion paper 'GST: Cross-border services, intangibles and goods'. Read our submission on the discussion paper.
- We wrote to the Minister of Revenue in May 2015, following the announcement of the Budget, to tell him how disappointed retailers are that the de minimis threshold has not been addressed. Read our letter to the Minister.
- We wrote to the Minister of Revenue in March 2015, following his announcement that he had asked his officials to report to him "in the short term" on the ways that other countries are taxing digital service and low value goods.
- We wrote to the Prime Minister in March 2015, following his comments that the de minimis creates an "unfair disadvantage" to New Zealand based retailers.
- We wrote to the Minister of Finance in December 2014 recommending he close the GST loophole to achieve budget surplus. Read our letter to the Minister, and his reply.
- We made a submission to the OECD on its draft guidelines for taxing services and intangibles. We recommended that the solution proposed should also be applied to low-value goods and that the OECD needs to consider this as a matter of urgency. Read our submission to the OECD
- We made a submission to Treasury suggesting that the Productivity Commission investigate the de minimis issue. The Commission is an independent body that provides advice to Government on ways to improve the productivity of New Zealand. Read our letter to Treasury.