Last year we reported on Australia’s government delaying a new rule to collect GST on overseas orders under $1,000 until July 1, 2018.
eBay and Alibaba had threatened to geo-block Australian consumers from making overseas purchases if this ruling was going to become law. There was hope the delay could result in finding a solution that is more agreeable to all, but that never happened.
Amazon in Australia came out on Thursday and now said it would actually start such a geo-block ban.
Effective July 1, 2018, Australian consumers are no longer able to purchase goods from Amazon.com and other Amazon marketplaces that are located outside Australia.
Instead, the company will automatically redirect the Australian shopper back to the amazon.com.au site. However, the company will offer a new “Global Store” on which it will collect and remit the 10 percent GST.
“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.
Based on our assessment, we will redirect Australian customers from our international sites to amazon.com.au where they can shop for products sold by Amazon U.S. on the new global store, available today.
This will allow us to provide our customers with continued access to international selection and 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 Australia Statement
The selection of items on Amazon Global Store is significantly less than on Amazon U.S. or UK. This change will impact the availability of items to Amazon shoppers that have used Amazon’s international marketplaces to purchase goods.
Last year, Citigroup estimated Australians spent between $500 million and $700 million on all Amazon websites, representing about 10 percent of all overseas online spending.
This was before Amazon added physical products to its Amazon.com.au store. Before the launch of full operations in Australia, Amazon sold digital goods in the country and select Amazon electronics such as the Kindle reader line.
What About eBay and Others?
eBay was one of the companies that threatened to geo-block Australian shoppers from its global marketplace if this GST rule would actually go into effect.
Yesterday, eBay announced a new service in Australia that goes head to head with Amazon Prime service when it becomes available.
It appears now that if importing products from outside the country becomes more difficult and more expensive for Australian consumers, the domestic battle between Amazon and eBay may push prices lower and increase costs as more small business online retailers will have to offer free shipping to compete against both marketplaces.
Adding GST to imported lower-valued goods was supposed to help Australian retailers. But it could end up backfiring if competition between the two marketplaces and independent online retailers turns into a price and service war.
New Zealand is considering a similar GST rule as Australia on imports. Maybe they should take a wait and see attitude before implementing the proposed tax on imports under $400.
Impact on Amazon Sellers in U.S. and UK
At this point, it is too early to assess the impact this may have on U.S. and UK sellers. Other overseas marketplaces owned by Amazon are impacted by this rule as well.
Will Amazon third-party sellers on the U.S., UK, and other marketplaces be able to make their goods available through this Global Store on amazon.com.au?
And what if eBay and other global eCommerce marketplaces follow Amazon with geo-blocking Australian consumers from buying on overseas sites?
Are Australian consumers going to search out small business websites that have no physical presence in Australian and work with those businesses to circumvent the entire rule by undervaluing goods for tax authorities?
The last one is a very common request by Canadian consumers that purchase from U.S. websites and small business marketplace sellers as their GST minimum is $20 on most goods.
For some U.S. and UK sellers, Australia is a good export market. And with the Australian government now dead set to enact this new GST law, the market will be a bit different.
What is your thought about this GST issue? Head over to our Facebook Discussion Group or use the comments section below.
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