Revenue Minister Stuart Nash says collecting GST on overseas online purchases is the "right thing to do" to create a level playing field for New Zealand's brick and mortar retailers.

Kiwis will have to pay GST on internet shopping purchases they make from overseas, Revenue Minister Stuart Nash has confirmed.



Retail NZ spokesman Greg Harford said confirmation of a so-called "Amazon tax" was "outstanding news" for the retail sector.



The retail lobby group has estimated the change would bring in $235 million a year in tax, rising to $935m within nine years because of the growth of internet shopping.



At the moment, most items costing less than $400 can be bought tax-free from overseas, unless they are items which also attract duty, in which case the threshold can fall to $225.

READ MORE:

* Trade Me expected to have to levy GST on all traders' Australian sales

* NZ businesses want GST law change as international online retailers pocket Government millions

* GST changes for internet shopping could come in under Labour or National

* Australians to pay GST on all internet shopping purchases

Speaking on Newstalk ZB, Nash said the new Government would "absolutely" introduce a 15 per cent goods and services tax (GST) on online purchases from international websites.

123RF Deloitte partner Allan Bullot says the Government could make an extra $140 million a year if it introduced an online shopping tax, while Retail NZ estimates the figure would be $235m.

Introducing such a tax was the "right thing to do", he said.

"[The National] government did not do enough about this so what happened ... a 15 per cent competitive advantage to those overseas, while our retailers had to deal with GST, overseas people didn't," he said.

A spokeswoman for Nash said the minister was still seeking advice on how the tax would be applied and there was no timeline yet for its introduction.

Labour Finance Minister Grant Robertson did not say whether the tax change was definitely a "happening thing" when asked later on Wednesday, indicating instead that it was still something that was being "investigated", but agreed it had long been Labour policy.

"Now we want to look at how we can implement something like that in government," he said.

National Party revenue spokeswoman Judith Collins said it had been committed to putting GST on low-value imports, but indicated it saw a complication with regard to the way Customs was funded through tariffs and bio-security inspection fees.

If New Zealand follows the same approach as Australia, larger foreign web businesses, and online marketplaces such as eBay, would have to levy GST when Kiwis buy from their websites, but there may be no change for smaller foreign firms that sell less than $60,000 of goods to New Zealanders a year.

Deloitte tax partner Allan Bullot said earlier this year that New Zealand's clothing, cosmetic, toy and book stores were "screaming blue murder" at international online shopping giants nabbing their customers with cheaper prices.

Bullott said tax regulation had not kept up with New Zealand consumers' shift to buy more items online.

Foreign companies that sell more than A$75,000 (NZ$83,000) of goods to Australians each year will have to collect GST on those sales from July next year, under a law change that was delayed from July last year.

Harford said the New Zealand Government could bring in the change at the same time.

"The issue is costing the Government significant amounts of money in terms of lost revenue and it is putting retailers at a significant price disadvantage."

Australia chose an A$75,000 threshold for foreign firms as it is the threshold above which local firms have to register for GST. New Zealand's GST threshold is $60,000.

If New Zealand follows the Australian model, GST might still be collected directly from consumers if they bought items costing more than between $225 and $400 from foreign firms whose annual sales in New Zealand were less than $60,000.

Lower value purchases from small firms might remain GST-free.

Former Victoria University pro-vice chancellor Bob Buckle said the growing number of items crossing our border but slipping through the "GST net" threatened the sustainability of New Zealand's tax system.

Before the election, the Labour Party promised not to change personal income tax, GST or company tax rates in a first term.

However, then revenue spokesman Michael Wood clarified before the election that did not rule out ensuring GST was paid on all internet shopping purchases, describing that change as "a current piece of work that is in the system under the current government that we would continue with".

The National government introduced a so-called "Netflix tax" in October last year that requires foreign companies to levy GST on all digital services they sell to New Zealanders, such as streaming television and music and online games and software subscriptions.

That is if they fall above the $60,000 annual sales threshold.

But National had cautioned that extending the change to physical goods – as the Labour-NZ First Government now intends to do – would be harder.

Bullot said the "Netflix tax" had brought it $113m in tax revenue in its first year – much more than the $40m the Treasury had forecast it would net in its first year in an estimate it made in 2015.

* Comments on this article have been closed.