Online retail giant Amazon will block Australian consumers from its global sites to counter new laws forcing it to collect GST on transactions.
Under new GST collection laws, online retailers will be forced to apply the 10 percent GST to goods purchased on international sites and shipped to Australia. Photo: RNZ
From 1 July, when Australia's new GST regulations kick in, Australian consumers shopping on Amazon international sites will be redirected to the local Australian site.
New Zealand followed suit this month, announcing that foreign companies will be asked to pay GST on goods sold online to New Zealanders from 1 October, 2019.
The Labour-led government proposes to collect GST on those goods, imposing it at the point of sale and waiving the tariffs and border recovery costs previously applied at the border.
New Zealand had also already applied GST to digital services from offshore, such as Netflix in 2016.
In a statement issued to the ABC, Amazon said it regretted the move and the inconvenience to customers accustomed to visiting Amazon's global online stores.
"We have had to assess the workability of the legislation as a global business with multiple international sites," an Amazon spokesperson said.
Under the new GST collection laws, online retailers like Amazon will be forced to apply the 10 percent GST to goods purchased on international sites and shipped to Australia.
The GST collection requirement came after years of intense lobbying from local retailers in Australia such as Harvey Norman, Myer, JB Hi-Fi and David Jones, who have seen their traditional bricks and mortar sales suffer from online competitors.
Currently GST is applied to items bought overseas for more than $AU1000.
It is understood that Amazon baulked at the massive administrative burden of tracking Australian GST from all overseas transactions.
Amazon is launching a global store accessible to Australian customers, where products from its retail site will be available.
In an email to customers today, the company said from 1 July it would redirect Australian shoppers from its international sites to amazon.com.au where products sold by Amazon US will be available on the new global store.
"We have taken this step to provide our customers with continued access to international selection and allow us to remain compliant with the law, which requires us to collect and remit GST on products sold on Amazon sites that are shipped from overseas," the company said.
"Amazon Global Store will allow Australian customers to shop on amazon.com.au for over 4 million items that were previously only accessible on amazon.com.
"This selection is in addition to the more than 60 million products that are already available on amazon.com.au across 23 categories, including books, fashion, toys, and electronics."
A spokesperson for Treasurer Scott Morrison said the new GST regulations "level the playing field" for Australian businesses.
"The government doesn't apologise for ensuring multinationals pay a fair amount of tax here in Australia. That tax revenue is used to fund essential services," the spokesperson said.
"A number of other countries are taking a similar approach and adopting a vendor collection model to collect GST from low-value imported goods.
"A level playing field will help Australian businesses grow and create more jobs and opportunities."
-ABC / RNZ