Australian consumers will be restricted from using Amazon.com global e-commerce sites, New Zealanders’ fate still up in the air
Australian customers will be restricted from Amazon.com global e-commerce sites, first and foremost Amazon.com, as the Australian authorities are continuing to implement their decision to crack down on global firms that sell inexpensive goods and fail to file Goods and Services Tax (GST).
Australia is slated to begin collecting GST on low-value goods starting next month, which is when Amazon will restrict consumers’ access to global sites, limiting them to purchasing exclusively from the local domain, which will block the option of shipping from other countries.
The effect that this will have on buyers from New Zealand who use the Australian version of Amazon and other sites remains unclear at this point, with no comment available from the e-commerce giant.
According to Chris Wilkinson, a retail consultant, these actions will most likely attain one major goal – Amazon will rapidly launch and expand a local version of their site for both Australian and New Zealand consumers.
“It’s likely they will adopt a similar strategy with New Zealand consumers in forcing them through a local site when the rule change takes place,” said Wilkinson.
“What will be interesting to see is how Australian retailers, selling into New Zealand manage the upcoming changes. There are a large number of Australia-New Zealand transactions taking place currently, many for products also available locally.”
These restrictions will inevitably lead to Australians having access to a regrettably smaller assortment of goods and only being able to purchase products available at the local Melbourne distribution center, which will, in turn, lead to a price hike.
To understand the scope of the issue, here are two numbers – the range of goods will shrink from 500,000,000 internationally to »64,000 locally.
“Online customers will end up having to find other solutions if they are geo-fenced from accessing the US sites, however, we don’t think this will have a transformational effect on Australian retailers’ performance,” claims Wilkinson.
Satya Marar, the policy director of Australian Taxpayers’ Alliance, believes that New Zealand is likely to be the next to feel the effect of Amazon restrictions.
“The Australian Government’s online shopping tax denies shoppers and families the same consumer choice available to billions of shoppers worldwide,” states Marar. “If this happens in New Zealand, Kiwis will be denied access to about 500 million products, most of which are unavailable locally.”
The 2017 Australian Senate committee inquiry concluded that an online shopping tax won’t actually increase the competitiveness of Australian retailers, while the cost of implementation of this tax would surely force the main e-commerce platforms to leave the market.
“Now we see these consequences in action,” confirmed Marar.
“New Zealand faces the same risk as it introduces its own Amazon tax. The Government wouldn’t need to assist domestic retailers with taxes on overseas competitors if it addressed local pressures such as zoning laws, strict labour regulations and red tape.”
The announcement came as a shock to the retail NZ general manager of public affairs Greg Harford.
“We know that Amazon has never wanted to register to Australian GST,” he said.
“There will be some that see it as a massive global corporation throwing a tantrum because it doesn’t want to meet its tax obligations in Australia but really we see it as more a question about strategy on their online retail market.”
Harford said, that, in fact, Amazon was already filing VAT in both EU and the UK, which makes it clear that the company’s choice not to comply with Australia’s new requirement was deliberate.
“It’s important to note that even on the Amazon US website there is already a very large number of products that aren’t shipped to Australia and New Zealand.”
According to Harford, Amazon is most likely to service provide services to Kiwis out of the Australian warehouses in the near future.
“There’s no question that Amazon could comply with GST registration requirements if it wanted to. It’s a huge global business with a turnover of two and a half times the size of the entire New Zealand retail sector and it should already be registered for GST here in New Zealand.”
Starting next October, GST regulations will come into effect in ew Zealand, mirroring the current Australian legislation. All international companies involved in online sales to New Zealanders will be required to collect and pay the tax to Inland Revenue.
All goods under NZ$400 (US$280) will now be subject to GST, wherein anything in excess of this amount is already subject o import duties.
According to the spokeswoman for revenue minister Stuart Nash’s administration, the motivation behind Amazon’s decision to restrict Australians’ ability to make purchases on its global sites was not entirely transparent, and whether or not GST was the only thing responsible for it was yet to be seen.
“The decision may be partly a marketing strategy related to the launch of Amazon’s ‘global store’ which is now available on the Australian website and which offers a range of new products to Australian customers,” she said.
Amazon’s presence in Australia is growing. A second distribution center in Sydney is under construction, slated to go into operation this year.