Amazon has responded to a new sales tax on online sales that it had previously avoided in Australia by blocking Australians from it’s global sites over the new tax. The Tax was put on overseas merchants to create a ‘level playing field’ for local businesses.
Amazon has responded to a new sales tax on online sales that it had previously avoided in Australia by blocking Australians from it’s global sites over the new tax. The Tax was put on overseas merchants to create a ‘level playing field’ for local businesses.
Internet giant Amazon said they will block Australian shoppers from its international websites in response to new Australian tax laws on online purchases. The new rules will require internet retailers like $AMZN to collect a 10 percent goods and services tax (GST) on everything bought from overseas sites from July 1.
The new law also includes sales under the current tax-free threshold of 1,000 Australian dollars ($756). Amazon said that Australian shoppers wanting to use its global platforms will instead be directed to its smaller Australian site. This site offers much less for sale. It has been reported that Amazon acted to avoid the huge administrative burden of tracking GST from all overseas transactions.
“While we regret any inconvenience this may cause customers, we have had to assess the workability of the legislation as a global business with multiple international sites,” Amazon said in a statement.
Amazon said it will open a “global store” for Australians. In the new store they will add an extra 4 million items previously available only on its American website.
“This will allow us to provide our customers with continued access to (our) international selection and remain compliant with the law,” it said.
That said the number of products available will be a mere fraction of what’s on sale globally. The new tax rules are in response to the very unlevel playing field local competitors to Amazon were on. Companies like Harvey Norman had lobbied for years for a fair field to play on. They had to apply GST to all online and store sales. Like in the U.S. traditional brick and mortar retail operations have been hit by online sales. The difference here Australian retailers particuarly couldnt compete with the effective 10% discount BEFORE $AMZN infamous price wars.
Amazon only launched it’s locat Australian site last December, shipping from a warehouse in Melbourne with another planned in Sydney. It had around AU$1 billion in sales from Australia annually through shipping from overseas ahead of the launch, according to Morgan Stanley analysts.
Treasurer Scott Morrison said the new laws “Level the playing field for Australian businesses. The government doesn’t apologize for ensuring multinationals pay a fair amount of tax here in Australia,”.
For Americans the move is of interest given President Trump’s previous attacks on Amazon destroying businesses and costing jobs. Europeans have also been up in arms about Amazon huting businesses and avoiding taxes.
Source: Bloomberg, Reuters
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