Retailers cry GST over forwarding service

TOM PULLAR-STRECKER
Last updated 05:00 06/09/2012

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Overseas online stores are becoming increasingly willing to ship products direct to Kiwi consumers, and more shoppers are using forwarding services to buy from those that won't.

Retailers Association spokeswoman Louise Evans McDonald said the trend made it more pressing for the Government to find a way to levy GST and duty on overseas purchases, which are mostly tax-free below a threshold of $400.

United States courier company I-parcel yesterday launched a forwarding service, Prezoom.com, "specifically geared" to help New Zealanders buy online from US merchants.

Customers can instruct online stores to deliver their purchases to Prezoom's address in Delaware, where there are no domestic US sales taxes, and Prezoom then forwards them to their home in New Zealand.

Prezoom marketing manager Michael Forrester said that though it was not the only such service it believed it was the cheapest, charging NZ$19.50 to deliver a 500-gram package, usually within seven days.

Customers could "track and trace" their packages over the web, or using iPhone and Android apps that are under development.

Prezoom would soon begin deliveries to Australia, South Africa and Singapore, he said. It had picked New Zealand first, partly because I-parcel already had a good relationship with NZ Post but also because it knew merchants' willingness to ship to New Zealand was patchy.

"Our contribution is super-economical shipping prices that, combined with low US product purchase prices, result in real savings for New Zealand shoppers," Forrester said.

Prezoom knew whom each incoming package belonged to because it issued each client with a delivery address that had an embedded account number.

Evans McDonald said the association believed the use of such forwarding services was growing. "We don't have any facts or figures, but they have become quite popular. Through social- media interactions, people are sharing that kind of knowledge."

At the same time, more online retailers, such as British clothes store Boohoo, were offering free shipping to New Zealand, she said. Trade Me chief executive John Macdonald also said overseas online retailers were getting their act together shipping to New Zealand when he announced the auction house's annual results last month.

The Retailers Association has lobbied the Government to remove the $400 tax-free threshhold that applies to most overseas purchases, arguing it is unfair on local retailers, who must charge GST on all sales.

A lower threshhold, starting at $240, kicks in on products that still attract import duty, such as clothes, shoes and jewellery.

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"Finding the solution is the key thing, and it is not something we are stopping looking for," Evans McDonald said.

One option was to reduce or abolish the threshhold, but because of the costs of collecting small amounts of tax on items "you have to look at a mechanism to make it worthwhile for the Government to do that," she said. Fairfax NZ

Contact Tom Pullar-Strecker
Infotech editor
Email: tom.pullar-strecker@dompost.co.nz
Twitter: @PullarStrecker

- BusinessDay.co.nz

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