18 Oct 2018

Tax change to soften online GST price impact

11:33 am on 18 October 2018

The government is cutting import taxes on low-value goods to soften the impact for online shoppers who start paying GST on all overseas purchases next year.

Online shopping

Photo: RNZ

The government is counting on international vendors to collect 15 percent GST on all imported purchases valued at less than $1000 from 1 October 2019.

Customs will continue to collect the tax on higher value goods.

But it will will remove tariffs, custom duties and other import fees on low-value goods under $1000 which will make some imports cheaper.

The policy is in line with Australia, which has registered 700 overseas suppliers for GST, and follows the European Union's approach to sales tax.

The government has been successfully collecting GST on overseas digital services and products, such as movies and software since 2016.

New Zealand retailers have complained about the unfair tax advantage international merchants have on low-value items, such as books, that had been exempt under a $400,000 threshold.

A bill amending the GST Act will be introduced this year.

The initial proposals earlier this year had been for GST on online purchases goods under $400.