Come 1st July 2017 Australians may find themselves being shut out from their favourite overseas retailers when the upcoming 10% GST on goods purchased from foreign sellers hits, eBay warns.
The current GST exemption for goods purchased under the value of $1,000 will cease in July this year. Under new tax regulations, announced in August 2015, the Australian government will require overseas online retailers that have an Australian annual turnover above $75,000 to collect GST on all goods, including those under the current $1,000 low-value threshold.
In line with the upcoming law, online marketplaces such as eBay, Amazon and Alibaba would be required to collect the tax in order to bring it in line with Australian domestic sellers. eBay says the new rules may force it to prevent Australians from buying from overseas sellers.
“Regrettably, the government’s legislation may force eBay to prevent Australians from buying from foreign sellers,” wrote eBay in its submission to the Senate Committee.
“It is open to abuse by foreign companies, it exposes Australians to the risk of double taxation, it will reduce price competition and choice for all Australians who shop online, and it will drive online trade away from trusted, cooperating online marketplaces to the dark parts of internet,” said eBay.
According to the e-commerce marketplace, there is no foreseeable and practical way for the Australian government to enforce overseas retailers to abide by its GST law, and complying with the new law and shutting out Australian buyers would mean they would be disadvantaged, as although they can still buy from Australian eBay sellers, they would be unable to bid in a much bigger global marketplace.
“The proposed legislation is complex, inconsistent, unworkable and will harm Australian consumers in many ways,” eBay wrote.
Other e-commerce powerhouses including Amazon and ASOS have echoed eBay’s concerns. Amazon said while it would support the new law, it was not in favour of the collection method, saying that shipping companies should bear the brunt of the tax charge.
These companies are now fighting the Australian government in a joint submission to the Senate Committee, stating they are online marketplaces that bring buyers and sellers together.
The argument is that they don’t have legal title to the prices of items sold on its platforms, what is being sold and they don’t even handle the goods, comparing themselves to a landlord of a shopping centre being required to collect GST on the merchandise sold in each store.
The new GST law was in response to create a level playing field regarding tax laws for Australian and overseas retailers after local stores blamed lethargic sales on overseas competitors having an unfair price advantage on goods below $1,000.