New Zealand is looking forward to implement a new law that will enable the government to tax purchases such as books, shoes and other small items made online from overseas companies in what will be called the “Amazon Tax.”
New Zealand’s revenue minister Stuart Nash announced that the government would work on finding a solution to the loophole in its tax structure that allowed individuals to purchase low-cost items overseas from online platforms without having to pay the 15% tax imposed on goods sold in the country’s offline retails. The new system will levy the same amount of tax on items costing less than $400 and only has to be approved by lawmakers before coming in full effect from October 2019.
Several countries are confronted with the same problem as e-commerce companies provide cheaper deals that available locally and products sold are not generally provisioned by tax regulations. Offline retailers are the most affected by this online purchase trend as most of their clients turn to overseas e-commerce platform to purchase the same product for less money. The Amazon tax will bring smiles back upon the faces of offline retailers since the Amazon Tax will make online shopping on small items more expensive, therefore rewinding the culture of offline shopping for these particular items.
Australian lawmakers are also coming up with the same initiatives and the country plans to collect tax on low-cost purchases before the end of the year while the European Union will begin collecting taxes by 2021.