‘Unreasonable and unworkable’: eBay hopes government reconsiders GST approach

Ecommerce giant stands firm on criticism of collection model for low-value imported goods

A Productivity Commission inquiry has concluded that the government’s proposed method of collecting GST on low-value imported goods although imperfect is the best choice currently available.

However, eBay is hoping that the government will still reconsider its approach, which will force the online shopping site and other ecommerce giants such as Amazon that operate online marketplace-style services to collect GST on purchases from sellers outside Australia.

The Treasury Laws Amendment (GST Low Value Goods) Act 2017 was passed in June with an amendment that mandated a PC inquiry into the legislation. The legislation closes the ‘loophole’ that meant sub-$1000 purchases from overseas sellers were exempt from GST.

Under the act, the operator of an “electronic distribution platform” is treated as the supplier of low value goods if the platform is used to purchase the goods, even if the goods themselves are sold by a third party (such as an eBay seller).

eBay, Amazon, Etsy and Alibaba have all criticised the approach, with eBay even claiming it may be forced to block Australians from making purchases foreign sellers when using its site.

The PC inquiry concluded that given the decision to collect GST on low value imported goods, “the legislated model is the most feasible among the imperfect alternatives at this time.”

Alternative models pushed by ecommerce companies, which would involve logistics companies collecting GST from sellers, “could capture more revenue, but their feasibility is hampered by paper-based declaration processes still used for international mail,” the PC concluded adding that Australia Post would be forced to “negotiate agreements with myriad other postal services”.

So-called “transporter-based” models would also “impose high administrative and compliance costs, and some would cause inconvenience for consumers,” the PC’s report states.

In a statement to Computerworld, eBay said it “understands the need for a level playing field” between overseas sellers and local businesses.

“The major marketplaces and a range of other core stakeholders made it clear during the Senate inquiry hearings [into the bill] that the method of collection proposed is unreasonable and unworkable,” the company said.

eBay said that it hopes between now and 1 July 2018 when the new obligations kick in, the government “works cooperatively with the OECD as they investigate a global solution to levying taxes on foreign sellers that does not damage trade, reduce productivity and deny customers access to trusted third-party platforms.”

Amazon has been approached for comment.

The full PC report is available online.

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