ATO crackdown on dodgy foreign retailers looms blog image

ATO crackdown on dodgy foreign retailers looms

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Online shoppers could lose access to foreign retail sites who avoid GST and import costs under a crackdown being considered by the ATO and Border Force to deal with “unfair competitors” on local businesses.

Local businesses are already feeling the pressure from overseas online retailers who sell goods at lower costs. This can hopefully level the playing field.

Small Business Minister Michaelia Cash has raised the possibility of geo-blocking dodgy foreign online retailers with Treasurer Josh Frydenberg and Home Affairs Minister Peter Dutton.

In a letter sent by Cash, she stated that local companies were “competing with overseas entities on an uneven playing field” and internet service providers might be asked to block foreign online retailers who are intentionally defrauding the Commonwealth.

Cash also stated in the letter, “It is open to the Commonwealth to request internet service providers disrupt access to specified online services by blocking the offending website(s).”

The request was written due to the persistent calls from local sellers to address international e-commerce sites undercutting their costs, supported by deceptive invoices that understate product prices and leave out payable GST.

By valuing items under $1000, international retailers can typically get away with duties, taxes, and other charges on products at the border.

Jobs on the line

The Australian Border Force recognised about $170 million in understated border revenue, consisting of duties and taxes, throughout the 2017-18 year. Local businesses state much of the conduct is going unnoticed.

Retail owners have been raising the problem of non-compliance by international online retailers for more than a decade and most agree that it is sucking the life out of independent retailers.

A few have been forced to close down because they could no longer compete with dodgy global merchants.

Peter Dallimore, a local business owner of Stanbridge’s Hobbies comments, “It’s such a constant thing. I had a bloke in the other day who put some radio-controlled cars on the counter. He paid $90 for them. I’d sell them for $600. There’s just no way I can sell them for that.”

Border Force and the ATO to join forces

A joint examination between Border Force and the ATO to figure out the real extent of the non-compliance is now being considered. Meetings between both companies and the Australian Small Business and Family Enterprise Ombudsman (ASBFEO) are scheduled in the coming months.

According to small business and family enterprise ombudsman, Kate Carnell, these meetings will consist of discussions about using Section 313(3) of the Telecommunications Act to possibly geo-block e-commerce sites who are breaking the law.

She adds, “There has been a bit of a view from Border Force and others that it’s too hard and they simply don’t have the capacity to have a look at every package that comes in.

“I accept that’s true, but I don’t think that’s even vaguely a reason to do nothing.”

 

You can read more of this story at Smart Company.

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