Tax charges disadvantage New Zealand retailers

Kiwi retailers are charging consumers an extra 15 percent tax for purchased goods, whereas companies overseas do not.

On May 1, the government announced it would require foreign websites to register for GST.

Retail NZ’s General Manager of Public Affairs, Greg Harford, says charging GST is one of the factors that has been encouraging Kiwis to shop overseas instead of at home.

“That obviously creates a competitive disadvantage across New Zealand retailers,” says Harford.

More consumers are choosing to purchase goods online to avoid paying tax, however if you spend over more than $400 on overseas items you get charged the New Zealand Customs Import Entry Transaction Fee.

Wellington student, Phoebe Craig, spent USD $495.68 on Glossier beauty products and was charged $49.24 NZD in tax.

Ms. Craig made a bulk order, purchasing two of the same items to reduce shipping costs.

“If I’d ordered my products separately, I wouldn’t have been charged the tax,” she says.

Sam Morris, the PLG Administrator of Customs NZ, says customs do not collect GST on lower value goods when it’s less than $60 for practical reasons.

“The administrator costs would be higher than the GST or duty collected if customs were to charge GST from goods lower than $60.”

Retail NZ has played an active role in lobbying the government to ensure foreign websites in New Zealand are also charging tax on low-value goods.

From October 1 2019, overseas companies will also be charging consumers GST on low-value items.

Mr Greg Harford says they want “to ensure that foreign websites selling into New Zealand are facing the same tax complications as New Zealand businesses.”