New GST Laws Set to Cost International Retailers $583 Million Per Year

April Davis By April Davis | 02 Jul 2018

Now that the Australian Government’s new GST laws for international shopping are in force, experts predict online sellers who choose to absorb the extra costs could fork out a collective $583 million in as little as 12-months.

According to finder.com.au, the introduction of GST for all goods worth less than $1,000 that are shipped from sellers outside of Australia, could have huge ramifications on the local retail industry.

Coming into effect yesterday, the comparison site estimates the government’s new GST legislation could end up costing overseas retailers, such as ASOS, Boohoo, Net-A-Porter and Marks & Spencer up to $583 million each year.

The only way retailers can avoid the extra tax is if they pass the cost onto the consumer, but it’s unclear whether that will be the case for a lot of overseas businesses.

“The reality is overseas retailers are all in the same boat: they want to show us competitive prices and keep their Aussie customers,” said Bessie Hassan, the money expert at finder.com.au.

Presently, 73 percent of Australian consumers shop online from overseas retailers – this equates to roughly 14 million people. On average, finder.com.au says these shoppers make an international purchase five times a year, with a cart value of $80. If international sellers decide to pass the new online sales tax onto consumers, they would need to drive their prices up – making them less competitive in the local market.

“It’s unclear which retailers will absorb the tax, which will bump up their prices, or which will stop shipping to Australia altogether.

“Australians love shopping online so it’ll be interesting to see whether this tax deters some from spending with overseas retailers. Others might turn to local stores instead, which would give the retail industry a much-needed boost,” Hassan said.

Hassan believes that with taxes and international shipping attached to an overseas purchase, it could end up cheaper for consumers to shop locally.

Some global companies have already announced their plans to stay compliant, with Amazon geoblocking Australians from its international marketplaces.

“While we regret any inconvenience this may cause, from 1 July we will be redirecting Australian customers from our international Amazon sites to amazon.com.au where you can shop for products sold by Amazon US on the new Amazon Global Store, available today,” the company wrote in an email to customers.

Despite Amazon’s decision to stop Australians shopping on its American and UK site, Amazon-owned book e-tailer, Book Depository has announced it will continue shipping to Australia.

“Australians will continue to be able to buy 18 million books from Book Depository with free delivery,” Mitch Lang, the marketing manager at Book Depository said last month.

eBay has also decided to absorb the extra online sales tax to ensure its shoppers still have access to its global range of goods.

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