Amazon cuts Australia from its U.S. site to avoid sales import tax

SYDNEY (Reuters) – Inc said on Thursday it will force Australians to use its Australian website instead of its much larger U.S. site from July 1 to avoid a new sales tax on certain imported goods.

FILE PHOTO: The logo of Amazon is pictured inside the company’s office in Bengaluru, India, April 20, 2018. Picture taken April 20, 2018. REUTERS/Abhishek N. Chinnappa/File Photo

The online retail giant said it would redirect Australians to the newly launched Australian site once the 10 percent Goods and Services Tax (GST) was applied to imported online goods worth under A$1,000 ($756) from the start of the 2018-2019 financial year.

“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 in an email.

The move will drive traffic to Amazon’s Australian website, which has drawn criticism for a thin product range and uncompetitive prices since it began taking orders in December.

However it may also benefit Australian retailers which have been hammered by the rise of online shopping and had campaigned to have the GST apply to all goods shipped from overseas.

Until now, GST has applied only to most goods sold in Australia and imported goods worth over A$1,000, making relatively low-cost imported items cheaper than their equivalents in local stores.

“The government doesn’t apologize for ensuring multi-nationals pay a fair amount of tax here in Australia,” a spokeswoman for Treasurer Scott Morrison said in an email.

“A number of other countries are taking a similar approach and adopting a vendor collection model to collect GST from low-value imported goods.”

Shares of local e-commerce site Ltd were up 1.5 percent in mid-session trading, while shares of electronics retailers JB Hi-Fi Ltd and Harvey Norman Holdings Ltd were up about 1 percent. The broader market was up about 0.5 percent.

Some 4.6 million adult Australians visited Amazon’s U.S. site in November 2017, the month before its Australian website went live, according to consumer metrics company The Nielsen Co.

Amazon says its Australian unit offers 60 million products in 23 categories, compared to the more half a billion products on its U.S. site.

Reporting by Byron Kaye; Editing by Stephen Coates

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UPDATE 1-Amazon geoblocks Australia from US site as tax change kicks in