Australian marketplace imports tax 300% bigger than estimated

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Australians have an insatiable appetite for marketplace imports from platforms such as eBay and Amazon, it would appear.

Last year, the Australian Government changed the law requiring overseas merchants to collect GST on all items under $1000 whereas previously there was no requirement to do so. Now, having predicted they would collect some AUS$70 million in the entire first year from marketplace imports, tax collecting has already raked in AUS$81 million from the first quarter revised predictions of collecting well over AUS$200 million GST taxes for the full year are expected.

Partly the massive tax deluge has come from compliance – eBay for instance are automatically adding on GST and collecting it on all marketplace imports to Australia and this must have raised the expected 70% to 75% of sellers dodging the tax. It was only expected that 25% to 30% would actually comply. The rest is down to Australian’s willingness to purchase cross border and paying GST on their overseas purchases doesn’t appear to have dented their appetite.

The Australian Taxation Office has confirmed that all the major platforms have followed eBay’s steps and signed up to collect GST. They are following up on the few yet to put compliance in place. The policy of charging GST on marketplace imports came from local retailers complaining that they had to pay domestic sales tax and it wasn’t fair that overseas sellers could undercut them.

While eBay was quick to comply, Amazon took a different tactic and initially blocked Australians from buying globally saying it was too complex to collect tax. By November, just in time for Black Friday, Amazon recanted and opened up global sales allowing Australians to shop from overseas Amazon sites once again.

There are two lessons to learn from the Australian Taxation Office’s insistence that GST is collected on marketplace imports. Firstly, if you’re selling internationally then you should be marketing to Australians as paying 10% tax hasn’t put them off from cross border shopping. Secondly, it’s likely that other countries around the world have been watching Australia and at some point in the future they may too scrap de miniums thresholds and also insist that local sales taxes are collected by overseas merchants.

3 Responses

  1. New Zealand likely to introduce later this year, reversing their current de minimis (~NZ $400). Hopefully it won’t dampen demand there either.

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