ARA to work on low value GST compliance
The Australian Retailers Association has said it will work with government to ensure compliance with a controversial new tax on low value imports.
International retailers will be forced to collect and remit GST on imports valued at under $1000 under the new regulation, which comes into effect next week.
ARA executive director Russell Zimmerman, who lobbied for the changes for several years, has joined a chorus of local retailers saying they are looking forward to the changes.
Proponents of the legislation believe large international retailers like Ebay and Amazon have been unfairly advantaged by not having to charge GST on many products they’re selling to local shoppers.
“We’re hoping this tax fairness will give a much-needed boost to the industry and we will continue to work with the Government to ensure a 100 per cent collection rate,” Zimmerman said on Thursday.
But amid longstanding concern from impacted retailers, including Amazon, Ebay and Alibaba, that it will be difficult to ensure high rates of compliance with the legislation, Zimmerman said the ARA would work with government to ensure a good outcome.
Zimmerman said discussions with government and the ATO would include proposing additional collection models to improve compliance.
International retailers are scrambling to ensure that they are compliant with the changes, having complained that it would be difficult to chase down the thousands of third party sellers on their networks to ensure GST was being charged.
Ebay announced it would work on a solution allowing it to collect GST from buyers purchasing in any currency, from any of its sellers.
Amazon, on the other hand, will redirect any customer within Australia to the company’s Australian online shop – effectively barring them from the more robust US store.
“While we regret any inconvenience this may cause customers, we have had to assess the workability of the legislation as a global business with multiple international sites,” Amazon said in a statement last month.
Treasurer Scott Morrison said the legislation would ensure multinational corporations paid their fair share of tax in Australia.
“If [they] aren’t forced to pay their fair share of tax, they will have a competitive advantage over retailers here in Australia, on our own main streets and in our shopping centres,” Morrison said in response to Amazon’s decision.
During consultations Ebay cited Treasury modelling that found a so called ‘vendor collection model’ would yield a tax compliance rate as low as 25 per cent.
Marketplaces last year offered an alternative model whereby Australia Post and others would have collected GST on purchases when they came into the country, but the postie said it would have been a massive burden on its operation.
KPMG, commissioned by Amazon, produced modelling that predicted compliance rates as high as 70 per cent under a logistics model.