Aus Government will block overseas websites that refuse to collect GST | Hacker News Reader

Aus Government will block overseas websites that refuse to collect GST

choice.com.au

43 pointscaf59 comments

"It's critical to understand that the website blocking capability will only ever be used to prevent the worst crimes.

It's definitely NOT the thin end of the wedge."

- some luddite politician prior to legislation requiring blocking technology

For those who think this is addressing a relatively small problem, one of the major Australian banks analysed [1] the accounts of 1 million of its customers (1 in 22 Australians) in 2011 and found that 74% of e-commerce by revenue was cross-border. Three quarters! In some markets, over 90% of the revenue was from abroad.

It's not just fashion and cosmetics, things like lawn mowers were also getting imported.

Part of the problem was AUD appreciation which put the MSRP of most things a good 50% above the rest of the world. Coupled with high costs in Australia (due to tight labour legislation which helps sustain an egalitarian culture), no Australian retailer could compete. The AUD has weakened substantially since then so I wonder if the picture has changed enough to make GST matter.

Charging GST might help a little bit, but the issue is FX, high local costs, and relatively cheap international shipping. For example, ASOS offers free international shipping so long as you are ready to wait 4 weeks. This is fine with most customers who prefer buying the same jeans for $60 and wait to paying twice as much and having them instantly. They employ only a handful of people in Australia to manage inbound shipments and customs, but it is (was, 3 years ago when I last looked) a significant chunk of their global profits.

That being said, protectionism didn't work out for the Australian car industry.

[1] http://globalmarketsresearch.commbank.com.au/ReportWeb/d13de...

FYI your link got messed up by a space, might want to edit it

Thanks, done.

working link: http://globalmarketsresearch.commbank.com.au/ReportWeb/d13de...

Other reasons protectionism didn't work in Australia were Free Trade Agreements where we import cars from eg: Thailand with no duty, but exports to Thailand attract around 70%.

Then there was the insistence on manufacturing cheap family cars rather than luxury models, ensuring the production lines would never be profitable.

The car industry in Australia looked more like a public capital extraction mechanism than a (heavily subsidised) car building business.

>This is fine with most customers who prefer buying the same jeans for $60 and wait to paying twice as much and having them instantly.

This probably hits closest core of this issue. It's not 10% cheaper to buy overseas it's 15%+ cheaper to buy from overseas. I truly hope this policy is managed correctly and we don't spend more than we recover just to make Gerry Harvey happy.

I've seen much more than 15%. The US businesses run regular discounting that can make every day, branded goods as much as 70% cheaper.

It doesn't look that way online anymore because many businesses have sprouted up with overseas operations and Australian branding. For example Galaxy Perfume, a .com.au, is owned and operated by Perfume Emporium, a US business.

Shipping takes about a week if the warehouse is in Asia, which is OK since Australian post is particularly slow and with the exception of high premium same day delivery services (as offered by, say, The Iconic in big cities) you will wait half a week anyway.

The businesses that play by the rules and have a local warehouse can be hilariously off. For example, I recently bought a bunch of shirts from a Jermyn Street shirtmaker's UK website, because it was a good 50% cheaper, even with international shipping to Sydney, than getting them off their Australian one.

I am sure if Australian workers agreed to lower minimum wage to US levels then they too could sell products online for less.

Correction: Australian government will attempt to restrict IP addresses of certain sellers when a large, party-supporting local retailer submits a complaint about them. (I.E. Gerry Harvey)

"New regulations, announced in 2015 and to be implemented from July 2017, require overseas businesses with an Australian annual turnover of $75,000 or more to collect GST on all goods, including those under the current $1000 low-value threshold "

It's not the fact the Aus government collecting tax is bad, remember Apple, Google and a slew of other companies are recognised corporate tax cheats, it's the fact this legislation can be used as a tool to ^ban^ more of the Internet.

>"...remember Apple, Google and a slew of other companies are recognised corporate tax cheats..."

I fail to see how one can make this assertion without any citations. Apple has paid over 19B in tax expenses in 2015 [1]. Alphabet(Google) has paid over 3B[2]. No other company I could find came remotely close to Apple's level. For some perspective, their tax expense is greater than 44% of the world's countries GDPs[3]. If one reads the definition of tax cheat at Investopedia[4] it does not apply to Apple nor Google.

You may not like those companies and you may not believe that they pay enough in taxes but this does not connote that they are "recognized tax cheats".

[1]https://finance.yahoo.com/quote/AAPL/financials?p=AAPL [2]https://finance.yahoo.com/quote/GOOG/financials?p=GOOG [3]https://en.wikipedia.org/wiki/List_of_countries_by_GDP_(nomi... [4]http://www.investopedia.com/terms/t/tax-cheat.asp

I'm sure the GP was talking in reference to the amount of tax those companies paid on their Australian business.

See for example here: http://www.smh.com.au/business/the-economy/apples-85-million...

Google, Microsoft and others are in a similar position.

https://www.theguardian.com/australia-news/2015/apr/08/googl...

"I fail to see how one can make this assertion without any citations."

The truth shall set you free.

* http://www.aph.gov.au/Parliamentary_Business/Committees/Sena...

    In the past, a multinational company with a 
    branch in Australia had a local board that 
    was tasked with maximizing profits. But 
    increasingly, Australian operations of 
    multinational companies are becoming agents, 
    shifting revenue offshore specifically to 
    minimize Australian profits. This was evident
    throughout the inquiry.

    The American headquartered technology companies 
    run their Australian operations as marketing and
    distribution companies and shift revenue earned 
    in Australia to other jurisdictions. The legitimacy 
    of these transfers will continue to be a focus of 
    the inquiry.

source: "Executive Summary: Background to the interim report" ~ http://www.aph.gov.au/Parliamentary_Business/Committees/Sena...

and more reporting.

* http://www.abc.net.au/news/2015-04-08/tech-giants-deny-austr...

* http://www.abc.net.au/news/2015-04-08/google-apple-microsoft...

* http://www.smh.com.au/federal-politics/political-news/senate...

* http://www.sbs.com.au/news/storystream/corporate-tax-crackdo...

* http://www.sbs.com.au/news/article/2015/04/07/big-business-s...

* http://taxwatch.org.au/2014/page/18/

They want companies in every other country outside of Australia to collect and remit tax to the Australian Tax Office?? Good luck with that!

Imagine trying to get Sven's Online Yak-hair Mocassins in Norway to complete a quarterly BAS.

Surprised they are not focusing on LOCAL Aussie ecommerce sites that don't collect and remit GST for local sales.

That's the easy part though. Australian sellers who ship from overseas would be committing tax fraud not to start collecting GST on these sales.

> Surprised they are not focusing on LOCAL Aussie ecommerce sites that don't collect and remit GST for local sales.

Like?

One example is Kogan, who claims the sale occurs in Hong Kong.

https://www.kogan.com/au/help/import-duties-and-gst/

Most subscription based SaaS services for instance. You usually have a single price advertised for your monthly revenue. Most customers are just an email address, not a physical address.

It's a tough call to look at your monthly Stripe payments and try and work out who is a local customer and who is overseas. I know this from hard experience. We have to cross refer the Stripe info across to our user database where we have an 'Office Location' field used in the app itself (for other purposes) to try and work it out. Messy. But without that, it is a wild stab in the dark.

I am willing to bet that most AU SaaS businesses are either claiming all their sales are from overseas, or just estimating a %age of Australian customers to fill out their BAS figures.

If a lot of their customers are businesses they'll know, because their Australian business customers will want a tax invoice so they can claim it as an input credit.

If Sven manages to sell $75,000 AUD worth of moccasins to Australians, he might reasonably have the resources to collect the taxes as well.

That's not to say he will, but I feel that selecting 75k as a threshold falls on the side of "it's cheaper to comply", which is the right move.

$75,000 gross retail, at a usually far smaller profit margin -- call it $7500.

Do you seriously expect someone to hire a tax attorney for Australia over that much income? That's the price of walking into the door.

If they are smart they will make the tax so simple you don't need an attorney: just slap a decimal point in the right place and send a check to an easy to find address.

That's an if.

Let me put it like this. The ATO's website for submitting quarterly tax statements requires a Java Applet to perform verification with a private key stored on your machine.

Despite Java's "Write Once, Run Everywhere" promise, every single update of my OS (mac) and/or browser would cause issues because the OS and browsers are actively trying to prevent you from running Java Applets for security reasons.

Which I understand, and also support, but it means that I'd be locked out of the site and had to spend a couple of hours hunting around forums posts trying to find a solution - and sometimes one wouldn't even exist.

My current solution to this problem is to have a locked down, non-updating Windows VM that I use exclusively for filing my business activity statements.

It's a pain for me to do it. I don't think it's going to be any easier for Sven.

If Sven is making $7500 from sales to Australia, he's probably making at least $100K from sales to Europe, USA, etc. He can afford an eCommerce package that adds a GST line item when the destination country is Australia, or VAT when the destination is the UK.

Nobody needs a one-on-one with a tax attorney over this.

But why does he owe Australia anyway? He isn't there. Not his problem. The shipping company owes something, but not Sven. What if an Australian citizen visits Sven's shop in person? Should he have to pay the tax then? The origin of the seller makes no difference. The shipping makes no difference. The shipping company should pay tax on the shipping cost as they are benefiting from Australian roads, police, etc. But old Sven? Why does he owe Australia anything? Should there be passport based taxation in retail stores? Because that's what this means. The method of transporting an overseas sale: personal suitcase or FedEx -- is irrelevant. The sale actually occurred outside Australia.

I know leftists love their worldwide taxation, but this is getting ridiculous. What's the sales tax rate for jeans in South Korea? What are the exemption rules for Bangladesh?

Enough with the taxes. If Australia wants to compete, they ought to compete. Apparently Australia is too expensive and doesn't make stuff for which there is demand. How is that Sven's fault? Also this benefits the consumer, they spend less with Sven and they can spend more on housing, services or other products, thus stimulating the economy and ultimately creating growth.

> The sale actually occurred outside Australia.

I think this is where the problem lies - did it? I think it did, just like you. But as a German who e.g. always had trouble buying regular game version s on Steam and always getting "low violence" editions I got the impression that at least some governmnents think the sale happens where the consumer is when online shopping. Probably only when it benefits that government, but well, we all know how it is. Or maybe it is different for digital goods, since nothing really was physically shipped?

Well, since the government can't collect what they don't know about, they want Sven to do the effort, charge extra for Aussie customers and then forward them that money.

Extremely ridiculous.

That's the crux of the problem. The GST is essentially every business person in Australia having to self assess and become a tax collector on behalf of the ATO.

I am scrupulous when tracking GST for my local clients, but when I sell to someone overseas, I haven't a clue about their local regulations or tax requirements, and I don't have the resources to stay abreast of it.

I used to be a consultant for various enterprise systems. In Australia, there are something like 8 total permutations for GST (GST Free, GST Exempt, Capital Acquisition etc. on purchases and sales) Quite straightforward.

However, if you look at the USA, with their local, state, county and federal tax laws across the country, there are something like 60,000+ likely permutations.

Yes. The government (customs) already has processes in place to stop and collect GST on any incoming goods worth over AUD$1000. Plus extra duties on certain items like musical instruments etc.

The threshold is probably there so that cheaper items like Sven's moccasins don't use up valuable (people) resources.

However, perhaps they are realising that the millions of small transactions slipping through are costing them massive tax revenue.

Ok, they can fix the 'Goods' side of the GST, but how the heck are they going to police the 'Services' part of it?

> I feel that selecting 75k as a threshold falls on the side of "it's cheaper to comply"

I doubt the Australian government will have much luck penalizing Sven, in Norway, for non-compliance of an Australian tax/law.

No need - they just block the site, and Sven loses his $75k in revenue. That's the penalty.

No way that will work the vast majority of consumers in Australia are tech savy enough to sign up for VPN and shop that way /s

I seriously doubt the AU government is going to go around blocking thousands (millions?) or websites that sell products into AU but don't pay AU taxes (my company included).

"I doubt the Australian government will have much luck penalizing Sven, in Norway,"

Back-packer tax for EU citizens? ~ http://www.abc.net.au/news/2016-09-01/backpacker-tax-set-to-...

That is Australia collecting tax in Australia. Entirely different.

If Sven's using an ecommerce platform like Shopify then chances are all he has to do is click a few buttons to enable tax collection for Australia.

I'm sure platform providers will do whatever they need to do to make the process as smooth and simple as possible for their customers, the only other thing to take care of is actually paying the money to the Australian government, and hopefully they won't fuck it up by making it too complex. Then again, this government is pretty incompetent where technology is concerned (cough NBN cough) so who knows.

Isn't that why people use payment gateways? So they can handle all of the processing and legislation for you? For example, isn't something similar already required for collecting VAT in the European markets?

Here in Canada, anything that exceeds the low value item exemption (which is ridiculously low at $20) gets taxed at the border when it enters the country. This is a pain, yes, but at least you're still able to buy whatever overseas goods you want. The Australian solution seems.. illogical at best. Savvy buyers can just work around the blocks, but others will be left without goods that they could have otherwise purchased, albeit with a bit of a delay.

Obviously the goal is to coerce sites into collecting the taxes to keep the business, but surely that could be done within the existing system, without bringing internet censorship into it. For instance, they could de-prioritize processing of shipments where taxes weren't collected, giving companies an incentive to comply (since they would have an advantage in shipping time over competitors who don't). This approach seems unnecessarily heavy-handed.

Australian use of VPNs is about to skyrocket!

Nah, it's already pretty high thanks to Netflix and similar.

Can someone who knows about tax law explain what the scope of the GST is with regards to imports? I.e. how big of a deal is this?

Does everyone who sells items to Australian purchasers have to pay GST? Or is the GST only applied for some corner cases where, (for example) Australians sell stuff to each other, but involve an oversees leg in the deal?

(Edit: this is of course a seperate issue from how blocking capabilities can be abused in future...)

It is just a national 10% sales tax.

The current situation is that you are required to register and remit GST if you make AUD$75,000 worth of GST-taxable supplies "connected with Australia". This fairly lengthy ruling speaks to what falls under that term: https://www.ato.gov.au/law/view/document?docid=GST/GSTR20003...

Currently items under AUD$1000 which aren't alcohol or "bulk orders" are "low-value imports" and aren't taxed, so they don't count in the $75,000 threshold. This is one of the things that's changing in July 2017 - the removal of the low-value threshold.

In the current system, if you directly ship goods from outside Australia to the end-customer in Australia it is deemed that the customer is the one that's importing it, and therefore the one responsible for the GST (they're supposed to pay it to Customs). It's not a "supply connected with Australia" and doesn't count in the $75,000 threshold.

It sounds like this last provision is changing as well but it's actually hard to find the details on this. There's just high-level descriptions like http://www.budget.gov.au/2016-17/content/bp2/html/bp2_revenu... .

Australia takes Howards doctrine of 'punching above it's weight' and without any meaningful leadership just punches itself in the face. Seriously Straya, why are you punching yourself? Why are you punching yourself? HAHAHAH... Why are you punching yourself? Why are you punching yourself?

As a citizen watching those in charge, it feels more like I'm the embarrassed child at a bbq watching our drunk dad slur something racist about the neighbours, take a swing at his brother in law for something he misheard, trip over his thongs and spill beer all over his pants.

Australians have mastered the art of crab mentality. Dodge those pincers.

Given how large the e-commerce market is and how high the sales tax is, I'm sure a substantial black market will form around avoiding this tax. Privacy concerns may not be enough to motivate people to use VPNs or proxies but hit their pocketbooks and I'm sure the use of these tools will take off.

The black market infrastructure that shields the origin of these goods will also shield fraudulent merchants from consumer challenges and regulators. I imagine it will also give cover to narcotics and other illegal goods by conflating the purchasing behavior of law-abiding and criminal buyers and also the behavior of merchants.

What about just charging customs fees like everyone else in the world?

They originally were doing that but the volume of imports was so high they couldn't deal with the processing back log. Then they moved to only charging GST on imports over $1000 AUD. That actually worked really well. Then they got greedy. And were pushed by powerful retail owners to do something.

The whole thing is ridiculous because there are far bigger fish escaping the frying pan that they just ignore. Like the whole negative gearing property issue. They don't touch that massive tax hole because the individual politicians themselves are making huge coin off it.

It seems unlikely it'd actually get implemented.

That's what we thought about metadata retention

Would be smarter to just remove GST from goods that are commonly imported altogether.

Could offset the lost revenue with non-renewable energy taxes, land value taxes, capital gains taxes.

It's my understanding that a sales tax is one of the better revenue sources from a fiscal policy perspective. Its primary downside is the difficulty of collection, but otherwise the incentives are good. On the other hand, something like a capital gains tax discourages investment. (Not saying that shouldn't exist, just that it's not clear it's superior to a GST.)

Australian companies when selling to the EU have to collect and pay VAT. This seem only fair that those same EU retailers now must collect and pay GST?

It would make more sense if they just banned the stores ability to remit funds via the VISA/Mastercard (etc) networks.

"Australian companies when selling to the EU have to collect and pay VAT."

Unless there's a special deal between Aus and EU I've never heard of, then no. If you bought goods from outside EU, you pay VAT and import taxes (if applicable) at the customs.

"If you buy goods for the purposes of your business from a supplier based outside the EU, you must generally pay VAT at the point of import"[1]

1. http://europa.eu/youreurope/business/vat-customs/cross-borde...

Consumers arent businesses.

You are wrong.

https://quaderno.io/blog/what-you-must-know-about-vat-if-you...

No, your link only talks about digital goods, that are exemptions. Of course, you can't pay VAT for digital goods (subscriptions, ebooks, mp3 etc.) on arrival, because there's no shipping and thus customs are avoided, so VAT must be included in sale's price.

Here's information regarding buying from non-EU countries for individuals[1] and it clearly states: "As soon as you buy a product from a non-EU country, then effectively you become an importer and become liable to Customs and Excise Duty as well as Value Added Tax (VAT) payments."

1. https://ec.europa.eu/taxation_customs/individuals/buying-goo...

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