GST to be charged on purchases below $400

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#2056095 14-Jul-2018 10:27

Kyanar:

You are aware of course that the EU and UK have expected international businesses to register for and pay VAT on any sales to EU and UK citizens for decades right? You can't shut the barn door, the horse has not only bolted it's managed to catch an international flight and make it to another continent.

This works fine within the EU, because there are agreements in place. It is my understanding that the current law does not permit EU countries to pursue sellers outside the EU who don't charge VAT. If goods arrive without VAT being charged, the importer is liable for the tax. That's no different from the current situation in NZ or Australia. What is different is what the ATO says they will be doing - actively trying to force non-Australian businesses to comply, and pursuing matters through foreign courts.

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#2056097 14-Jul-2018 10:37

NZ and AU do have agreements with some overseas countries that might assist them in doing that, though it'll still be rather difficult.

I don't really have a sense of the scale of some of the overseas businesses selling into NZ - how many would really meet the $60,000 threshold of sales to NZ that would require them to charge GST? I would think lots of the smaller ones don't

Kyanar

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#2056117 14-Jul-2018 11:18

SirHumphreyAppleby:

This works fine within the EU, because there are agreements in place. It is my understanding that the current law does not permit EU countries to pursue sellers outside the EU who don't charge VAT. If goods arrive without VAT being charged, the importer is liable for the tax. That's no different from the current situation in NZ or Australia. What is different is what the ATO says they will be doing - actively trying to force non-Australian businesses to comply, and pursuing matters through foreign courts.

The current law very much does. The UK, for example, will direct you to appoint a VAT representative in the UK, cut you off from online marketplaces like eBay, involuntarily enrol you, as well as demand a security bond for high risk of VAT avoidance. Plus the usual penalties.

rugrat

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#2056130 14-Jul-2018 12:07

https://www.taxadvisermagazine.com/article/vat-trick article/vat-trick

Kyanar:

SirHumphreyAppleby:

This works fine within the EU, because there are agreements in place. It is my understanding that the current law does not permit EU countries to pursue sellers outside the EU who don't charge VAT. If goods arrive without VAT being charged, the importer is liable for the tax. That's no different from the current situation in NZ or Australia. What is different is what the ATO says they will be doing - actively trying to force non-Australian businesses to comply, and pursuing matters through foreign courts.

The current law very much does. The UK, for example, will direct you to appoint a VAT representative in the UK, cut you off from online marketplaces like eBay, involuntarily enrol you, as well as demand a security bond for high risk of VAT avoidance. Plus the usual penalties.

To date, there have been no prosecutions for online VAT fraud, but HMRC has carried out many civil operations against suspected evaders. These civil operations include approaching three hundred investigations of businesses, and approaching four hundred compliance interventions in 2016/17.

It it also says in article there’s about £9 billion of sales with no VAT paid.

working well?

For NZ market size though, be easier to not supply.

https://www.taxadvisermagazine.com/article/vat-trick

JimmyH

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#2056240 14-Jul-2018 21:20

tdgeek:

JimmyH:

It depends on who you mean by "we" [...]

GST returns are two totals. GST Collected and GST Paid as per the Balance Sheet. NZ businesses do it, Netflix does it, Apple does it. It is a simple change to a Billing system, its two codes for two Balance Sheet items. It just seems that the real issue is we dont want to pay more for overseas purchases. Money, the a same old issue. And as quoted somewhere recently here its another Govt tax, so its a tax fetish, or I dont want to pay any more tax. Get the Govt to reduce tax across the board, they can do that and reduce expenditure as well, everyone is happy. I just cannot see the issue when I get charged GST on an ice cream but not on Chinese socks

I fear you have missed the point of my post. It wasn't about whether or not it's fair that GST is charged on some purchases and not others, or whether people are happy or not to pay GST, nor was it about whether it is able to be done or whether other businesses can do it.

It was that we can't force overseas companies to comply with our law. If we try and make them comply with our rules they might, if it's an important enough market for them to justify the cost and hassle to do so. Equally, for a tiny market like NZ, they might just decide it's not worth complying, and stop supplying to us instead. Some will go one way, others will go the other. But for NZ, having the major online sellers decide not to sell here would be a disaster for consumers; even those who don't buy online would suffer, as we moved back to the cold embrace of overpriced authorised resellers, who can merrily prune their product range and jack up prices once competition is removed.

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#2056248 14-Jul-2018 21:43

tdgeek:

An option is to charge GST on everything, as you say. But, when you do your GST return, you will have some French GST. So you do the easy GST return and its noted in that return that the French GST is $x. The NZ Govt will pay/refund French GST to France's IRD. That means a minor compliance for you (new accounting code for French GST), and the Govt has a minor task each month to pay to France. This way, GST is easy as its what everyone does now, just a small change to seperate overseas GST by country. Given that an accounting system has dozens and dozens of product and expense and balance sheet codes, no issue for a few more if anyone sells to other countries.

You have missed the point of my post. Which is a NZ exporter charges NZ GST on exports to countries that NZ has a GST treaty with. That exporter then pays that GST to the NZ government, and the government keeps it. It will also work the same, going in the other direction. An exporter will only need to check if the country they are exporting to, has a tax treaty with NZ. Say I buy something from France. The French seller will charge me French GST, which they then pay to the French government, and that government will then keep that GST. And the treaty will mean that the respective governments won't charge any import duties on the items, no matter how expensive they are.

This will make international trading extremely easy. As exporters only need to worry about the tax laws in their own country. While importers can buy with confidence, knowing that the price that they pay to the seller, is the final price. No nasty surprise tax demands. Governments will know that all goods and services have had tax paid on their sales. And that if someone is trying to avoid paying tax, they are evading tax in their own country. So far easier for the local tax authorities to enforce the tax collections. And no sovereignty issues, As each tax authority only needs to operate in its own country. It will also be far easier for NZ Customs to track down and collect unpaid duties. As they will be able to ignore packages that have been sent from GST treaty countries. And concentrate on packages that come from non GST treaty countries.

The extra tax collected will be offset by lower compliance costs. And lower costs in general, as there will be more competition. Due to it being easier for people to start exporting. Imagine all of those overseas shopping websites out there, that don't ship internationally. They will be able to easily start shipping internationally to other GST treaty countries. And you would be able to buy off them, knowing no extra duty to pay when the goods arrive in NZ.

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irongarment

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#2056252 14-Jul-2018 23:28

Aredwood:
tdgeek:

An option is to charge GST on everything, as you say. But, when you do your GST return, you will have some French GST. So you do the easy GST return and its noted in that return that the French GST is $x. The NZ Govt will pay/refund French GST to France's IRD. That means a minor compliance for you (new accounting code for French GST), and the Govt has a minor task each month to pay to France. This way, GST is easy as its what everyone does now, just a small change to seperate overseas GST by country. Given that an accounting system has dozens and dozens of product and expense and balance sheet codes, no issue for a few more if anyone sells to other countries.

You have missed the point of my post. Which is a NZ exporter charges NZ GST on exports to countries that NZ has a GST treaty with. That exporter then pays that GST to the NZ government, and the government keeps it. It will also work the same, going in the other direction. An exporter will only need to check if the country they are exporting to, has a tax treaty with NZ. Say I buy something from France. The French seller will charge me French GST, which they then pay to the French government, and that government will then keep that GST. And the treaty will mean that the respective governments won't charge any import duties on the items, no matter how expensive they are.

This will make international trading extremely easy. As exporters only need to worry about the tax laws in their own country. While importers can buy with confidence, knowing that the price that they pay to the seller, is the final price. No nasty surprise tax demands. Governments will know that all goods and services have had tax paid on their sales. And that if someone is trying to avoid paying tax, they are evading tax in their own country. So far easier for the local tax authorities to enforce the tax collections. And no sovereignty issues, As each tax authority only needs to operate in its own country. It will also be far easier for NZ Customs to track down and collect unpaid duties. As they will be able to ignore packages that have been sent from GST treaty countries. And concentrate on packages that come from non GST treaty countries.

The extra tax collected will be offset by lower compliance costs. And lower costs in general, as there will be more competition. Due to it being easier for people to start exporting. Imagine all of those overseas shopping websites out there, that don't ship internationally. They will be able to easily start shipping internationally to other GST treaty countries. And you would be able to buy off them, knowing no extra duty to pay when the goods arrive in NZ.

Bzzzt! Going to have to stop you there. Suddenly everyone orders everything from Amazon Leichtenstein, where GST is 0.01%. It's paid, so nothing further to pay in NZ.

Frankly I see nothing wrong with the current system, and in fact I'd increase the GST-free limit to $600 and get rid of the biosecurity fee.

Aredwood

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#2056255 15-Jul-2018 00:15

irongarment:

Bzzzt! Going to have to stop you there. Suddenly everyone orders everything from Amazon Leichtenstein, where GST is 0.01%. It's paid, so nothing further to pay in NZ.

Frankly I see nothing wrong with the current system, and in fact I'd increase the GST-free limit to $600 and get rid of the biosecurity fee.

I doubt that NZ would ever have a GST treaty with Leichtenstein. (Does Amazon even have any operations there?) Doubt that NZ would do much trade with Leichtenstein anyway. And realisticly, it would only make sense for NZ to have GST treaties with countries that NZ already has free trade agreements with. Meaning that the old system would continue for trade with those countries.

Due to Brexit, NZ will probably soon be negotiating a free trade agreement with the UK. And another one with the EU. NZ should try to get a GST treaty included in those agreements.

tdgeek

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#2056260 15-Jul-2018 08:21

Aredwood:

tdgeek:

An option is to charge GST on everything, as you say. But, when you do your GST return, you will have some French GST. So you do the easy GST return and its noted in that return that the French GST is $x. The NZ Govt will pay/refund French GST to France's IRD. That means a minor compliance for you (new accounting code for French GST), and the Govt has a minor task each month to pay to France. This way, GST is easy as its what everyone does now, just a small change to seperate overseas GST by country. Given that an accounting system has dozens and dozens of product and expense and balance sheet codes, no issue for a few more if anyone sells to other countries.

You have missed the point of my post. Which is a NZ exporter charges NZ GST on exports to countries that NZ has a GST treaty with. That exporter then pays that GST to the NZ government, and the government keeps it. It will also work the same, going in the other direction. An exporter will only need to check if the country they are exporting to, has a tax treaty with NZ. Say I buy something from France. The French seller will charge me French GST, which they then pay to the French government, and that government will then keep that GST. And the treaty will mean that the respective governments won't charge any import duties on the items, no matter how expensive they are.

This will make international trading extremely easy. As exporters only need to worry about the tax laws in their own country. While importers can buy with confidence, knowing that the price that they pay to the seller, is the final price. No nasty surprise tax demands. Governments will know that all goods and services have had tax paid on their sales. And that if someone is trying to avoid paying tax, they are evading tax in their own country. So far easier for the local tax authorities to enforce the tax collections. And no sovereignty issues, As each tax authority only needs to operate in its own country. It will also be far easier for NZ Customs to track down and collect unpaid duties. As they will be able to ignore packages that have been sent from GST treaty countries. And concentrate on packages that come from non GST treaty countries.

The extra tax collected will be offset by lower compliance costs. And lower costs in general, as there will be more competition. Due to it being easier for people to start exporting. Imagine all of those overseas shopping websites out there, that don't ship internationally. They will be able to easily start shipping internationally to other GST treaty countries. And you would be able to buy off them, knowing no extra duty to pay when the goods arrive in NZ.

But GST is a consumption tax, we dont charge it on exports, we charge it on what is consumed in NZ.

tdgeek

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#2056261 15-Jul-2018 08:25

JimmyH:

tdgeek:

JimmyH:

It depends on who you mean by "we" [...]

GST returns are two totals. GST Collected and GST Paid as per the Balance Sheet. NZ businesses do it, Netflix does it, Apple does it. It is a simple change to a Billing system, its two codes for two Balance Sheet items. It just seems that the real issue is we dont want to pay more for overseas purchases. Money, the a same old issue. And as quoted somewhere recently here its another Govt tax, so its a tax fetish, or I dont want to pay any more tax. Get the Govt to reduce tax across the board, they can do that and reduce expenditure as well, everyone is happy. I just cannot see the issue when I get charged GST on an ice cream but not on Chinese socks

I fear you have missed the point of my post. It wasn't about whether or not it's fair that GST is charged on some purchases and not others, or whether people are happy or not to pay GST, nor was it about whether it is able to be done or whether other businesses can do it.

It was that we can't force overseas companies to comply with our law. If we try and make them comply with our rules they might, if it's an important enough market for them to justify the cost and hassle to do so. Equally, for a tiny market like NZ, they might just decide it's not worth complying, and stop supplying to us instead. Some will go one way, others will go the other. But for NZ, having the major online sellers decide not to sell here would be a disaster for consumers; even those who don't buy online would suffer, as we moved back to the cold embrace of overpriced authorised resellers, who can merrily prune their product range and jack up prices once competition is removed.

If sellers to NZ decide its not for them, fine. If they have no need to maximise sales, fine. Amazon and eBay have no issue. The only ones that are more affected are small online sellers, so my suggestion that they charge NZ GST pay that to their Govt that we have an agreement with who then pays IRD. Or they register with IRD and do a GS return monthly and remit it. How many countries are there that sell online. Not many, its not a drama. But for those Kiwis that want cheaper purchases by avoiding GST and some of these evading businesses decide not to sell here, thats the drama. Supporting globalised trade, when it suits

tdgeek

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#2056262 15-Jul-2018 08:27

irongarment:Frankly I see nothing wrong with the current system, and in fact I'd increase the GST-free limit to $600 and get rid of the biosecurity fee.

Thats defeating the point on this thread, which is to capture GST on the huge and growing volume of smaller purchases.

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#2056325 15-Jul-2018 10:44

tdgeek:

Aredwood:

tdgeek:

An option is to charge GST on everything, as you say. But, when you do your GST return, you will have some French GST. So you do the easy GST return and its noted in that return that the French GST is $x. The NZ Govt will pay/refund French GST to France's IRD. That means a minor compliance for you (new accounting code for French GST), and the Govt has a minor task each month to pay to France. This way, GST is easy as its what everyone does now, just a small change to seperate overseas GST by country. Given that an accounting system has dozens and dozens of product and expense and balance sheet codes, no issue for a few more if anyone sells to other countries.

You have missed the point of my post. Which is a NZ exporter charges NZ GST on exports to countries that NZ has a GST treaty with. That exporter then pays that GST to the NZ government, and the government keeps it. It will also work the same, going in the other direction. An exporter will only need to check if the country they are exporting to, has a tax treaty with NZ. Say I buy something from France. The French seller will charge me French GST, which they then pay to the French government, and that government will then keep that GST. And the treaty will mean that the respective governments won't charge any import duties on the items, no matter how expensive they are.

This will make international trading extremely easy. As exporters only need to worry about the tax laws in their own country. While importers can buy with confidence, knowing that the price that they pay to the seller, is the final price. No nasty surprise tax demands. Governments will know that all goods and services have had tax paid on their sales. And that if someone is trying to avoid paying tax, they are evading tax in their own country. So far easier for the local tax authorities to enforce the tax collections. And no sovereignty issues, As each tax authority only needs to operate in its own country. It will also be far easier for NZ Customs to track down and collect unpaid duties. As they will be able to ignore packages that have been sent from GST treaty countries. And concentrate on packages that come from non GST treaty countries.

The extra tax collected will be offset by lower compliance costs. And lower costs in general, as there will be more competition. Due to it being easier for people to start exporting. Imagine all of those overseas shopping websites out there, that don't ship internationally. They will be able to easily start shipping internationally to other GST treaty countries. And you would be able to buy off them, knowing no extra duty to pay when the goods arrive in NZ.

But GST is a consumption tax, we dont charge it on exports, we charge it on what is consumed in NZ.

That doesn't seem quite true to me. It is charged on the shipping costs to NZ, 90% of which is consumed outside NZ before the item gets here.

tdgeek

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#2056364 15-Jul-2018 11:07

Geektastic:

That doesn't seem quite true to me. It is charged on the shipping costs to NZ, 90% of which is consumed outside NZ before the item gets here.

In that case, the cost of making the product has already been consumed before it gets here.

Shipping is one of many costs of the product, it becomes part of the landed cost.

antoniosk

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#2067603 3-Aug-2018 16:42

https://www.stuff.co.nz/business/105982965/amazon-warns-on-internet-shopping-tax-change-but-government-signals-no-uturn

Hmmmm....

________

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#2067614 3-Aug-2018 17:15

A level playing field would also be eliminating GST on all domestic purchases under $400.

Plesse igmore amd axxept applogies in adbance fir anu typos

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