The two online retailing behemoths, Amazon and Ebay, have taken divergent approaches to the pending changes to GST on low-value offshore sales, although both have confirmed they will collect GST on products ordered from their platforms and shipped to Australia.
(This is one of the oddities of the new law: While offshore sellers are required to collect GST on products under $1000, the looser arrangements for products over $1000 – which relies on the dubious efficiency of Australian Border Force as a tax collector at the border – remain in, um, force.)
‘EBay is working on compliance with its GST collection obligations,’ an Ebay spokesperson told PhotoCounter earlier this week. ‘EBay is considered an Electronic Distribution Platform (EDP) operator under the new legislation. EBay will be responsible for collecting the GST on low value imports and paying it to the Australian Government.
‘This requires major changes to eBay’s global systems and we are working to have these ready by 1st July.’
The GST portion of a product price will go to an eBay-owned PayPal account. EBay will then remit this GST directly to the Australian Taxation Office (ATO).
‘EBay is in the process of reaching out to sellers most impacted by this change to help them understand what we are doing and to make them aware of the new regulations. Each region is doing something slightly different with communications led by EBay businesses in those regions. We have also included the GST on low-value imports in the Australian seller release.
‘As EBay is responsible for collecting and remitting the GST, most sellers are not directly impacted by the change. We are recommending sellers seek tax advice if they have further questions.
Amazon, on the other hand, has moved to block Australian shoppers from the massive Amazon US site along with other Amazon locations around the world, instead offering a sub-set of the Amazon range (4 million of 480 million products) from an entity called ‘Amazon Global’ which will be part of the Amazon.AU Marketplace.
So while there will be a moderate boost in products offered from the Amazon.AU site, they will come with GST applied. Amazon will collect GST on purchases under $1000 from Amazon Global and remit the tax to the ATO.
‘Amazon Global Store products are sold by Amazon US and are made available on Amazon.com.au,’ Amazon explains on its website. ‘When you search for a product using the search bar, the search results displayed will contain both Amazon Global Store products that will be imported into Australia and other similar products offered by other sellers.
Amazon.AU will charge GST in Australia as a conventional ‘onshore’ platform rather than comply directly with the offshore GST provisions. This will presumably see cameras supplied to Amazon US by the US distributor competing on Amazon.AU Marketplace with cameras supplied locally.
Amazon opposed the vendor collection model for GST, lobbying for a GST collection model which put the onus on international freight businesses to collect the tax. The arrangement it will implement resonates with its proposals to the Australian Government – an ‘import fees deposit’ levied on behalf of the shipping company which would cover GST:
At checkout, Amazon Global Store will estimate and collect the customs duties, taxes and fees (‘Import Fees Deposit’) associated with your order. Amazon Global Store will also permit the shipping carrier to clear your shipment through customs on your (or your recipient’s) behalf. For your convenience, Amazon will estimate and collect an Import Fees Deposit together with the item price, and such funds will be used by the carrier to pay the import fees on your behalf to the appropriate authorities upon entry to Australia.
‘We have taken this step to provide our customers with continued access to international selection and allow us to remain compliant with the law, which requires us to collect and remit GST on products sold on Amazon sites that are shipped from overseas,’ Amazon informed customers in an email this week.
‘Amazon Global Store will allow Australian customers to shop on Amazon.com.au for over four million items that were previously only accessible on Amazon.com. This selection is in addition to the more than 60 million products that are already available on Amazon.com.au across 23 categories, including books, fashion, toys, and electronics.’
The email came with a $20 voucher for their next Amazon.com.au purchase.
So while Amazon’s strategy is to ring-fence its Australian operations rather than change its global shopping cart system, Ebay seems to be ‘making lemonade’ in response to the change, presenting it as a competitive advantage: ‘EBay customers love the fact that we have a huge selection of over one billion listings across eBay’s global marketplaces so we are working on a solution that enables Aussie buyers to continue to shop from all eBay sites, while also capturing the required GST,’ an eBay spokesman told New Ltd.
‘EBay’s GST solution will allow us to collect GST in any currency, from any seller, from any EBay site. It also allows imports to Australia to continue without any structural barriers, redirects or blocks to the buyer experience.’
Alibaba also indicated it was working towards meeting the deadline – albeit with a singular lack of enthusiasm.
One segment of online retailers who seem to be currently evading payment of GST are those with a presence in Australia linked to shipping from overseas.
Ebay Australia actually nudges its offshore retailer customers towards such a ‘solution’ with the suggestion in its GST FAQs that: ‘If you have products overseas, you may wish to consider your pricing and warehousing strategy for Australian buyers.’
These kind of arrangements are also in place through Kogan/Dick Smith with its Kogan HK operation. (PhotoCounter sought input from Kogan and Amazon with no success.)
The ATO, the ACCC and Border Force are going to have to (get off their lazy bums and) actually enforce current tax and company law if the changes from July 1 are to be as effective as possible. As we are seeing across many facets of Australian governance, its not that we lack regulations, but we are poorly served by our regulators.