Online retail giant Amazon will block Australian consumers from its global sites to counter new laws to force it to collect the good and services tax on transactions.

Key points: It is understood Amazon baulked at the administrative burden of tracking GST

It is understood Amazon baulked at the administrative burden of tracking GST Under new collection laws, online retailers will be forced to apply GST to goods bought on international sites and sent to Australia

Under new collection laws, online retailers will be forced to apply GST to goods bought on international sites and sent to Australia Amazon will launch a global store accessible to Australian customers

From July 1 when the new GST regulations begin, Australian consumers shopping on Amazon international sites will be redirected to the local Australian site.

Consumer campaigner Christopher Zinn said shoppers will notice a significant reduction in options when browsing the internet for goods.

"Online shopping has put the world at your fingertips but now that world has shrunk," he said.

In a statement issued to the ABC, Amazon said it regretted the move and the inconvenience to customers accustomed to visiting Amazon's global online stores.

"We have had to assess the workability of the legislation as a global business with multiple international sites," a spokeswoman said.

Currently GST is applied to items bought overseas for more than $1,000.

Under the new GST collection laws beginning on July 1, online retailers like Amazon will be forced to apply the 10 per cent GST to goods purchased on international sites and shipped to Australia.

The requirement came after years of intense lobbying from local retailers in Australia such as Harvey Norman, Myer, JB Hi-Fi and David Jones, who have seen their traditional bricks and mortar sales suffer from online competitors.

Concerns over GST implementation

It is understood that Amazon baulked at the massive administrative burden of tracking Australian GST from all overseas transactions.

Mr Zinn said he understands why the Government is changing the rules, but questioned the process of collecting the GST.

"I think it's fair enough that Australian consumers pay GST on items they might buy, but asking international corporations to collect that for you is quite another matter," he said.

It is a sentiment echoed by the Federal Opposition, which supported changing the GST rules, but Shadow Treasurer Chris Bowen said he raised concerns with the Government last year.

"In principle we support the GST applying from the level of zero … when the government went down this road I raised concerns about implementation details, I was getting very strong feedback from providers that the Government's model would not work," Mr Bowen said.

Australian Retailers Association Chief Executive Russell Zimmerman said he expects the Government to tweak the system in the future.

"Our view is that it's better to put something in albeit that it won't work as efficiently as it should and at least start the collection," Mr Zimmerman said.

"Our understanding is that it is a three-year period and then they will be doing a review and I'm sure if it's not working successfully the Government will probably look in a shorter period of time than three years."

While Amazon has opted out, eBay has confirmed it is making major changes to its global systems so that Australian shoppers can still buy items from anywhere in the world.

"We won't block Aussie buyers, redirect them or require them to pretend they are located overseas. Australians will continue to be able to buy from any eBay site," a spokeswoman said.

'A level playing field will help Australian businesses grow'

Treasurer Scott Morrison said the new GST regulations "level the playing field" for Australian businesses.

"It's important multinationals pay their fair share of tax because if they don't they have an unfair advantage over retailers in Australia," he said.

"A level playing field will help Australian businesses grow and create more jobs and opportunities."

Mr Morrison has dismissed concerns that the implementation is not the right way to go.

"We're determined to make sure that multinationals pay their fair share of tax, whether its Amazon, whether it's Google, whether it's Facebook," he said.

"Whoever it is they have to pay their fair share of tax and we're making sure that they do it."

Australian shoppers will have online options

Amazon is launching a global store accessible to Australian customers, where products from its retail site will be available.

In an email to customers on Thursday, the company said from July 1 it would redirect Australian shoppers from its international sites to amazon.com.au where products sold by Amazon US will be available on the new global store.

"We have taken this step to provide our customers with continued access to international selection and allow us to remain compliant with the law, which requires us to collect and remit GST on products sold on Amazon sites that are shipped from overseas," the company said.

"Amazon Global Store will allow Australian customers to shop on amazon.com.au for over 4 million items that were previously only accessible on amazon.com.

"This selection is in addition to the more than 60 million products that are already available on amazon.com.au across 23 categories, including books, fashion, toys, and electronics."

Consumer advocates fear that Australians will be limited for choice by Amazon's decision, but Mr Zimmerman doesn't agree.

"Amazon have done this to provide customers with continued access to the international selection and allow them to remain compliant with the law in Australia."