The start of the new legislation, to force overseas suppliers, to pay Australian GST, on supplies of sub-$1,000 goods, to Australians, seems to have backfired, after Amazon announced (on 31.5.18) that it would subject Australian purchasers to a ‘geo-block’ – namely to redirect Australian purchasers, to its new Australian hub, which would pay the GST.
The move might have been designed to push customers to its Australian hub, as it has not done well – because of it’s thin product range – a tenth the range of its U.S. site – and uncompetitive prices. But therein lies the cost for Australians – they can’t get 90% of the range available in the US and some Australian businesses could be ruined, if their product is not one of the ones that Australians can buy through the Australian hub.
Treasurer: Scott Morrison, was unrepentant, saying:
“The second-biggest company in the world, run by the richest man in the world, shouldn’t get a leave pass from paying tax in Australia,” and
“If multinationals aren’t forced to pay their fair share of tax, they will have a competitive advantage over retailers here in Australia, on our own main streets and in our shopping centers.”
The ‘level playing field’ (on sub-$1,000 items) has been a benefit, to Amazon’s Australian competitors (with the share price of various listed entities rising on the news).
It is not just Australian competitors, who have got a benefit, from Amazon’s ‘geo-blocking’. eBay is planning to continue supplying to Australia, whilst still paying the Australian GST.
The trouble is, though, that this ‘level playing field’ has come at some cost to a good many Australians, and for some of them, potentially ruinous cost.
2.6.18
[Reuters: Amazon article; FJM; LTN 103, 31/5/18; Tax Month – May 2018]
Study questions (answers available)
- Was Amazon’s response to having to pay Australian GST, from 1 July 2018, ‘geo-blocking’ Australians back to their Australian hub (with its thin stock range and uncompetitive prices)?
- Was this cost to Australians expected, as part of ‘levelling the playing field’, with Australian suppliers, of sub-$1,000 items?
- Have Australian competitors with Amazon benefited?
- Is eBay planning to ‘geo-block’ in the same way?
