Australians won’t be able to purchase goods from Amazon’s international websites after July 1 thanks to a sales tax on overseas purchases, leaving room for competitors to take advantage of Amazon’s smaller presence in the country.
Australia will implement a 10 percent Goods and Services Tax (GST) on online overseas purchases under $1,000 AUD, or about $756 USD. The GST currently applies to items sold overseas for over $1,000 AUD.
Amazon is leaving its Australian customers without access to any of its other websites except for the much smaller Australian website, which is about 1/10th of the size of the U.S. website, according to Reuters.
“While we regret any inconvenience this may cause customers, we have had to assess the workability of the legislation as a global business with multiple international sites,” an Amazon spokesman said, Reuters reported on Thursday.
The $500 million to $700 million AUD ($376 million to $527 million USD) that Australians spent on all Amazon websites represented about 10 percent of all online overseas spending, Australian Financial Review reported Thursday.
Amazon’s competitor eBay said it will not follow in Amazon’s footsteps.
“eBay customers love the fact that we have a huge selection of over one billion listings across eBay’s global marketplaces so we are working on a solution that enables Aussie buyers to continue to shop from all eBay sites, while also capturing the required GST,” a spokeswoman said, Australian Financial Review reported.
“eBay’s GST solution will allow us to collect GST in any currency, from any seller, from any eBay site. It also allows imports to Australia to continue without any structural barriers, redirects or blocks to the buyer experience,” the spokewoman added. “This requires major changes to eBay’s global systems and we are working to have these ready by July 1.”
eBay announced on Tuesday it’s launching eBay Plus, a subscription-based service, in Australia that offers free country-wide shipping and returns.
“We know our customers love the value and convenience of online shopping but our research shows the cost of delivery can stack up over time,” Tim MacKinnon, Managing Director of eBay Australia & New Zealand, said in a statement on Tuesday.
Alibaba, a Chinese-based Amazon competitor, said it is preparing to implement based on the GST, though it remains critical of the tax system.
“The implementation of this tax is difficult and requires many changes to Alibaba’s systems,” a spokesman said, Australian Financial Review reported. (Related: Why Amazon Associates Removed Legal Insurrection From Its Program)
Australian Treasurer Scott Morrison called out against Amazon and its CEO, Jeff Bezos.
“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,” Morrison said in an email on Thursday, Reuters reported.
“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,” he added.
Ed Husic, the Australian Labor Party’s digital economy spokesman, said Australian customers will feel ripped off by the GST.
“For a lot of consumers who like to be able to hop on to other platforms in other countries, to test out prices or be able to buy stuff they can’t get there here, they will feel really ripped off,” he said. “Consumers who might have been able to get something they wanted, that they couldn’t get in Australia, have now had the door shut on them.”
Morrison lashed out against Australia’s Labor Party for its criticism of the GST, saying he is “disappointed, but not surprised, the Labor Party has once again chosen to side with the big multinationals to try and protect them from paying their fair share of tax in Australia.”
Husic said that “the government could easily have sat down and tried to work this out. They didn’t. They have no one to blame but themselves.”
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