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Ebay Warns Of Australian Low-Value GST Change Fallout

by Mary Swire, Tax-news.com, Hong Kong Tuesday, April 18, 2017

Ebay has warned that the Australian Government's proposal for a goods and services tax (GST) on low-value imports may force the company "to prevent Australians from buying from foreign sellers."

According to Ebay's submission to the Senate Economics Legislation Committee, this "appears to be the most likely outcome at present." The submission described the proposed legislation as "complex, inconsistent, [and] unworkable," and said that were Ebay to take this step, "no tax would be paid to Australia and none would be owed," while Australians would be denied choice and price competition would be lessened.

The legislation will require overseas vendors, electronic distribution platforms, and goods forwarders with an Australian turnover of AUD75,000 (USD56,571) or more to register for, collect, and remit GST for low-value goods supplied to consumers in Australia. Currently, low-value goods – that is, goods with a customs value of AUD1,000 or less – are generally not subject to GST when imported directly into Australia by the recipient.

The legislation was introduced to parliament on February 16. On March 23, it was referred to the Senate Economics Legislation Committee, which is due to report by May 9. If the legislation is passed, its provisions will enter into force on July 1.

Ebay's submission argued that the measure will fail to generate significant GST revenue and will instead drive overseas sellers away from "cooperative large-scale Australia-based market platforms onto the opaque parts of the internet and search engines." It also claimed that the bill will discriminate against overseas sellers selling via marketplaces because, unlike those who sell directly to Australian consumers, they will not be able to benefit from the AUD75,000 GST threshold.

On the compliance front, Ebay warned that if the legislation is passed, businesses will have to design, test, and implement far-reaching changes to their global business models within a matter of weeks. It said the proposed commencement date is completely unrealistic for both businesses and government, and that it would take years for online marketplaces to develop the necessary systems.

Ebay said that if the bill is not withdrawn, significant amendments will be required "to even contemplate third party online marketplaces somehow collecting GST given their current business models do not support it." It suggested that the Government should also work with the logistics companies, which "can require buyers to declare whether a good is new and to nominate a value of the good as part of the pricing of parcel delivery to Australia."

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