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GST and online shopping – is there a cure?

The NZ Government has delayed the Customs / IRD report on GST and online trading to allow the issue to be considered as part of the wider review of how global corporates are taxed. I think the merger of the issues was unavoidable. They are closely linked and the ultimate solution will be multilateral.

Nevertheless we’ve just come through another peak retail season with shoppers confirming their increasing appetite for internet purchases. Senior politicians have taken notice of the amount of GST being lost to the government and local retailers wonder why their overseas competitors continue to have this advantage over them.

As I see it, there are two interim solutions:
1. Remove the low value import threshold.
2. Introduce a domestic low value threshold for GST purposes.

Each has its own challenges and each means more compliance costs for someone. The first option appeals more however because it is consistent with perserving the integrity of our existing GST system.

cheers

Iain

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