Revenue Minister Stuart Nash said requiring overseas internet sites to levy GST was "only fair' when he announced the tax change in 2018.

Trade Me could suffer from the introduction of an Amazon tax, with GST likely to be slapped on many new goods sold through its online marketplace.

Kiwi retailers are celebrating a proposal by the Government to make foreign firms levy GST on sales they make to New Zealanders, for example through internet shopping sites located overseas.

But Trade Me could be one local firm that is negatively affected, and is calling for the Government to rethink its approach.

A discussion document released by Revenue Minister Stuart Nash on Tuesday proposed that online marketplaces should become responsible for collecting GST on low-value items, costing less than $400, that New Zealanders bought from overseas traders.

READ MORE

* Amazon tax will be accepted as 'fair play', minister forecasts

* Amazon tax: What it means for online shopping

* Government proposes 'Amazon tax'

However, there was no indication that rule would be restricted to overseas online marketplaces such as Amazon and eBay.

Collecting GST on sales by foreign traders would be a headache for Trade Me.

But it is understood that if Trade Me was not obliged to levy GST on sales that its overseas-based traders made through its platform to New Zealanders, then that could create a new "loophole" for foreign firms to dodge the Amazon tax.

That is because they could avoid charging GST simply by registering with Trade Me and selling goods to Kiwis through its platform, rather than selling direct or through the likes of Amazon.

TOM PULLAR-STRECKER/STUFF Applying the Amazon tax to onshore online marketplaces, notably Trade Me, is shaping up to be one of the bigger headaches for officials.

Trade Me spokesman Logan Mudge said the company wanted the Government to reconsider making marketplaces and foreign firms collect GST, and instead look more closely at other options, such as continuing to collect GST at the border, or making credit card companies levy the tax.

Sales by overseas sellers were "a decent chunk of our new goods sales", he confirmed.

"We bring these sellers on where there is demand from Kiwis but local sellers aren't filling the gap. These overseas sellers are set up well enough to collect and pay GST themselves in our view."

A spokeswoman for Nash would not comment on Trade Me's specific situation but said "a lot of issues around the marketplace system are open for feedback and consultation".

TOM PULLAR-STRECKER/STUFF Retail NZ policy manager Greg Harford welcomes an end to "dithering" over the Amazon tax as Revenue Minister Stuart Nash (centre) looks on.

Nash said on Tuesday that he thought at least three-quarters of foreign firms that will be responsible for levying GST on low value items from October next year would fall into line with the proposed rule change.

Deloitte tax expert Allan Bullot believed commentators who thought foreign firms would find it easy to avoid paying the Amazon tax were wrong.

Inland Revenue had agreements with many foreign tax authorities which allowed for mutual enforcement, he said.

It might also be easier than people thought for the tax department to estimate the value of goods that foreign firms shipped to New Zealand, Bullot said.

"There is lot more information out there than a lot of people think.

"Inland Revenue could look at online traffic to websites and credit card charges. There is awful lot of data collected when anything goes through the courier system."

The tax department had the right to access that information – for example from banks and internet providers – if they had good reason, he said.

"They have the ability to make 'section 17' requests to any organisations for tax purposes."

While Inland Revenue could not go on "fishing expeditions" for such data, its powers were "very broad", Bullot said.

"I think it is naive to think you would get 100 per cent compliance, but you would be taking a big risk if you were a supplier and assumed you wouldn't be caught in this system."