In context: A 10 percent Goods and Services Tax applies to consumer goods worth less than $1,000 (AUD) ordered online and imported to Australia beginning July 1. To remain compliant with local laws, Amazon is focusing on a dedicated Australian marketplace that is not subject to new additional taxes.
Amazon is about to start blocking Australian users by geofencing Amazon.com. Any users found to be from Australia will be redirected to a regional website. While this may not be an issue for everyone, US consumers have access to nearly ten times the number of products.
Pricing is also a problem for Amazon's Australian site. By comparison, goods listed on the regional site are not price-competitive and have not been since the localized version began accepting orders in December.
One of the main beneficiaries of the new tax law could be eBay. Although it is based in California, local sellers would be able to use the platform to buy and sell goods domestically without worry of additional taxes. International sellers will be able to have appropriate taxes automatically applied to orders. Smaller Australian merchants have been campaigning for this protective tax change so that they can more easily compete against overseas sellers.
It may seem as though Amazon is aiming to avoid taxes here, but in this case, it is the consumer that would ultimately end up paying the import fees. "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," said an Amazon representative.
According to Australian Treasurer Scott Morrison, Amazon will not be getting off so easy if he has anything to say about it. "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," said Morrison.
Whether this change will leave residents in a better market position or not is unclear. Local businesses and small domestic companies certainly stand to benefit, but losing access to a significantly larger product catalog could leave many disappointed.