Photo: Getty.
Photo: Getty.

BusinessMay 1, 2018

What is the ‘Amazon tax’ and why does it matter?

Photo: Getty.
Photo: Getty.

In today’s Cheat Sheet, we take a look at the so-called ‘Amazon tax’ and what it means for local retailers and consumers. 

So what’s the government taxing now?

The government has announced that low-value goods bought online from overseas will now be subject to a goods and services tax (GST) of 15%. Low-value goods include anything under $400 (anything more than $400 already gets taxed) and yes, that includes all those clothes, shoes, books and appliances you’ve been buying from sites like Amazon and ASOS (hence being nicknamed ‘the Amazon tax’). The changes will take effect from 1 October 2019.

What! This is an outrage. Why are they doing this? Why are they making me pay extra for stuff I buy online?

Keep in mind that whenever you buy anything locally – be that in-store or online – you’re paying 15% GST. The government is simply moving to apply the same principle to things you buy from overseas. It’s long been thought of as a loophole that gives offshore companies an advantage over domestic retailers who do have to collect GST.

“Local firms compete on an uneven playing field. Large multinationals sell exactly the same product into our market without collecting GST,” said Revenue and Small Business Minister Stuart Nash in a statement today. “Small businesses such as bookshops have convincingly argued they’re penalised by a system which is badly out of date. It’s particularly difficult for very small shops outside the main centres.”

Consumers will likely pay more for their goods. But the government says that in some cases, goods will actually be cheaper because of the removal of Customs tariffs, border security fees and biosecurity cost recovery charges.

What the changes would generally mean for different parties (Table: supplied)

Okay, that makes sense. So how is the government planning on collecting this GST? Are they just going to stand at the border and make people pay up as goods come in?

No, collecting at the border is time-consuming and expensive. A much better way is to use an offshore supplier registration system so that GST will be collected from point-of-sale by the companies themselves.

Not everyone’s an Amazon-sized behemoth raking in million dollars of revenue though. What about smaller, overseas-based retailers?

Offshore retailers would be required to register and collect GST if their total sales to New Zealand consumers exceed NZ $60,000 per annum. This is the same threshold that applies to domestic businesses and to offshore suppliers of cross-border services.

So how much revenue is this new online shopping tax set to bring in?

Revenue officials conservatively estimate that $53 million will be collected in 2019-2020, increasing to $78 million in 2020-2021, and $87 million in 2021-2022. Some tax experts have argued, however, that the amount estimated is wildly under. 

There’s also a precedent we can look at it in terms of how such a tax works. Back in October 2016, the government actually implemented a similar tax but for services (aka the ‘Netflix tax’). Over 200 offshore suppliers – including Netflix, Spotify, iTunes and Kindle – registered for GST under the new rules and so far, they’ve brought in more than $162 million which is well above initial estimates of $40 million per annum.

Kiwis will now have to pay GST on everything they buy – not just the stuff they purchase locally.

What about other countries? What are they doing about the issue?

Across the Tasman, our Aussie neighbours are also set to start collecting GST on low-value imports from July 2018 via an offshore supplier registration system . Switzerland will also introduce an offshore supplier registration system for the collection of VAT on low-value goods from January next year.

Meanwhile, the EU has announced plans to implement a system akin to an offshore supplier registration model for the collection of VAT by 2021. Other countries such as the United Kingdom and Canada also have a de minimis that is significantly lower than New Zealand’s de minimis – the threshold at which revenue is collected.

So is this going to help drive more business to domestic retailers?

It’s hard to say. Local retailers obviously argue that overseas retailers have a price advantage due to being able to offer tax-free goods. But in some cases, overseas retailers will still end up having cheaper prices, even with GST added on. In addition, the reason why Kiwis buy from overseas isn’t just based on price – a lot of goods just aren’t available in New Zealand like they are in the US, UK and Australia.

Regardless, retailers are stoked at the news. Retail New Zealand has said the announcement would be “very good news indeed for the sector” while Booksellers NZ said they were “pleased that the issue was fast-tracked through the Tax Working Group”.

“This won’t suddenly make books and similar goods from small retailers cheaper than can be bought from giant offshore retailers with their huge advantage in purchasing power,” Lincoln Gould, CEO of Booksellers NZ added. “But it will provide a better opportunity for shops to compete with service and curation of their goods. Thus the experience of shopping local will be more economic and pleasurable.”

Read more: Why does online shopping turn us all into rabid libertarians?


The Spinoff’s business section is enabled by our friends at Kiwibank. Kiwibank backs small to medium businesses, social enterprises and Kiwis who innovate to make good things happen.

Check out how Kiwibank can help your business take the next step.

Keep going!
Emergency Q
Emergency Q

BusinessMay 1, 2018

Who’s the most innovative hi-tech service of them all?

Emergency Q
Emergency Q

From transport, medicine, retail and travel, this year’s crop of nominees for Kiwibank’s Most Innovative Hi-Tech Service Award are being recognised for shaking up some of New Zealand’s most vital industries. With the winner to be announced on May 25 as part of this year’s Hi-Tech Awards, Jihee Junn takes a look at the talented four who’ve managed to rise to the top of the pack.

New Zealand’s annual festival of innovation, TechWeek 2018, is fast approaching, and if there was ever an event to top it all off, the Hi-Tech Awards would most certainly be it. It’s a chance to see and celebrate the New Zealand companies leading the big technological changes across their sectors.

Last year, payments business Pushpay – which provides mobile commerce tools for churches, charities and education providers – came out on top with two wins, including the coveted Hi-Tech Company of the Year award (for which its been nominated a second time round). The 2017 Awards also saw Aliesha Staples of Staples VR take home the prize for Hi-Tech Young Achiever of the Year (she’s been nominated again in 2018) while Frances Valintine, founder of the MindLab by Unitec and Tech Futures Lab, was unveiled as the 2017 Flying Kiwi.

Also highly coveted is the award for Most Innovative Hi-Tech Service which cybersecurity company RedShield took home last year. For 2018, there’s a brand new crop of companies battling it out for the prize – they’re the engineers building our tunnels, the app makers streamlining our hospitals, the brains behind our pay-at-the-pump terminals, and the developers that make our travel easier and more manageable.

The winner of which won’t be announced until May 25 at Christchurch’s Horncastle Arena. So in anticipation, we take a closer look at the talented four who’ve been nominated for their innovative services.

Beca (The Beacon System)

With more than 3000 employees spread across 20 offices throughout the Asia-Pacific region, Beca has come a long way since being founded almost a century ago by returning World War I veteran Arthur Gray. Established as a small engineering practice, Beca continues to provide a wide-range of engineering services to this day. It also offers a variety of innovative applied technologies and sophisticated business advisory expertise that extends across all sectors of the economy.

Over the years, some of Beca’s major projects in Auckland have included the Sky Tower, Wynyard Quarter and the recently completed Waterview Connection which remains New Zealand’s most complex road project to date. Across the rest of the country, Beca has also had a hand in building Christchurch Airport’s integrated terminal, Dunedin’s Emerson Brewery, RNZAF’s flight simulator, and Fonterra’s virtual reality safety training programme. Internationally, it’s gained recognition for high profile projects such as crowd modelling and simulation for the Rio 2016 Summer Olympics, Singapore’s iconic Marina One and DUO skyscrapers, Jakarta’s Ciputra World development, and Melbourne Airport’s string of expansions and upgrades.

Beca Beacon Earthquake Triage App – a dramatisation (Photo: supplied).

For the NZ Hi-Tech Awards, Beca entered the Beacon System: a real-time post-seismic event alerting service that assesses earthquake impacts on physical assets such as buildings and infrastructure. It’s an innovative Big Data software application and earthquake assessment algorithm enabling a prioritised inspection and response service that provides immediate impact information that helps clients make decisions about their business as quickly as possible.

Healthcare Applications (Emergency Q)

Rarely a moment goes by in a hospital emergency room where things don’t get a little bit hectic and crowded. To tackle this issue, Auckland-based company Healthcare Applications developed Emergency Q – a software platform and system that aims to reduce congestion in hospital Emergency Departments (EDs) by creating a digital connection between patients, EDs and community doctors.

Through Emergency Q, non-emergency patients who need urgent medical care are provided data to make informed decisions about where to seek treatment. This puts the decision-making power back into the hands of patients and helps to reduce the longstanding problem of hospital ED overcrowding, making for better quality, more efficient treatment.

Emergency Q

In 10 months, Emergency Q’s ED pilot volumes have reduced by 12%, saving patients 21,600 hours and significantly relieving pressure on ED staff and beds. For patients, they can access the right care faster, see live wait and treatment times, improve their health literacy/education, and book their nearest available participating primary care providers instantly. For medical staff, Emergency Q enables them to focus on the most urgent cases, relieve pressure on beds and other physical assets, and delay the need to spend money expanding ED capacity.

The service is available to patients as an app and can be downloaded on both iOS and Android. Currently, Emergency Q provides a live view of forecast wait plus treatment times for non-emergency patients at North Shore Hospital’s ED compared with the nearest urgent care (Accident and Medical) clinic – Shorecare – at Auckland’s Smales Farm. A trial of Emergency Q is also set to take place at Middlemore Hospital later this winter

Invenco (Invenco Cloud Services)

Almost a decade since it was established in 2009, Invenco has become the fastest growing secure self-service payment technology firm in New Zealand. It’s done this by providing a range of products including outdoor payment terminals (OPTs), electronic payment servers, payment switches, and, most recently, Invenco Cloud Services (ICS) which is up for the Innovative Services award this year.

Invenco OPTs all come with standard cloud connection, enabling customers full and fast access to its range of open platform cloud services.  These include everything from remotely inserting encrypted ‘keys’ to managing the playing of video and other high-resolution media to the screen, which are all key points of difference for Invenco in the market.

Most notably, Invenco Cloud Services has been picked up by US petroleum and convenience store chains. In implementing ICS, customers are not only able to pay-at-the-pump for a more efficient gas station experience, but watch video advertising and place orders for collection in store.

Last year, Invenco placed third in Deloitte’s Fast 50 Master of Growth index with 386% revenue growth over the past five years. It was also named one of EY’s ‘Top 10 Companies to Watch’ list for the second time, having previously made the list in 2015. Invenco currently employs more than 150 staff globally and conducts much of its research and development work here in New Zealand.

Serko (Zeno)

Founded in 2007, Serko has grown to become one of the leading figures in corporate travel management. Over the course of the last decade, it’s online and mobile products have come to dominate the market in Australia and New Zealand with more than $6 billion of corporate travel booked and managed through Serko’s platform annually.

Zeno

In 2017, Serko embarked on a project that would use innovative technology and design thinking to transform the corporate travel booking experience. The result of that process was Zeno: a travel management application that uses artificial intelligence and predictive workflows to streamline costs and personalise business travel across the entire journey. Designed to integrate with enterprise workplace applications like Slack and Skype, Zeno can build an itinerary and make a booking using natural language or voice commands. And because corporate cards and out-of-pocket expenses are an integral yet painful part of corporate travel, Zeno uses smart technology like optical character recognition so travellers only need to snap an image of their receipt and have it processed on the go.  

Zeno has gone on to become such a disruptive force in the corporate travel industry that it’s allowed Serko an entry point into both the North American and UK markets to take on the world’s billion-dollar industry behemoths.


The Spinoff’s business section is enabled by our friends at Kiwibank. Kiwibank backs small to medium businesses, social enterprises and Kiwis who innovate to make good things happen.

Check out how Kiwibank can help your business take the next step.