ATO Reveals How Online OS Sales Are Carving Up Retailers
The Australian Government is set to reap millions above what they expected in revenues after they slapped a 10% GST on low value imported online goods, the news is not good for Australian retailers with online sales from overseas online retailers such as Amazon set to top more than $3Billion dollars.
Tim Dyce, deputy commissioner of the ATO, who was speaking at an OECD Value Added Tax/Goods and Services Tax Global Forum in Melbourne revealed that the digital services tax has generated $272 million in its first year since being implemented, 180 per cent ahead of forecast and that this could rise “significantly” this year. These are sales that are no longer going to Australian retailers.
Amazon, eBay and other online retailers initially opposed the tax, but once it was approved, weighed in on its implementation. Gerry Harvey was among those agitating for a tax to “even the playing field” and after lobbying the Federal Governnment he got is way.
Late last year Amazon reveresed a decision to allow Australian consumers to access their global web site operations after initally trying to coral Australians into the Amazon Australia web site.
Sales slumped as consumers flocked to other overseas web sites due in part to cheaper pricing and expanded variety. In addition the Federal Government is collecting revenue on goods purchased above the low value goods threshold of $1,000.
GST collections on low-value imported goods alone generated $81 million in the first three months after it was implemented on July 1, Dyce revealed.
Dyce claims that the introduction of low-value international online sales tax and digital services tax were not an impossible nut to crack, despite the opposition they faced from some corners of the industry at the time.
“There was a lot of discussion prior to their introduction about whether these kinds of measures could possibly work,” Dyce said, calling these the most significant changes in the way the ATO has collected GST since its inception almost exactly 20 years ago.
“Thanks to the right consultation and design, led by Treasury along with the ATO, and with important input from business, the measures have clearly been effective, which shows we can provide a level playing field for online and physical businesses and between domestic and foreign businesses.”
The low-value GST was introduced as a way to close a loophole that enabled overseas sellers to avoid charging GST on orders shipped to Australia that were under $1000, creating a price advantage over domestic bricks-and-mortars.
Currently the Federal Government is investigating overseas retailers who are still shipping goods to Australia devoid of GST.
Dyce said the ATO has seen high levels of registration. He said he has received feedback from some online sellers that their business processes have improved and they have greater insight into sales performance since registering.
Inside Retailing said that some major online retailers, however, including Kogan.com and OzSale, have reported lower revenues since the low-value GST was implemented, as it has had a significant impact on their business models.