Amazon bars Australians from shopping on its non-Aussie sites to put pressure on the government to rescind tax rule

Australian retailers are required to collect 10% Value Added Tax on every sale; Amazon's Australia store collects this tax, but the company has rejected any suggestion that its non-Australian stores should collect the tax on shipments bound for Australia.

After a long-fought battle that pitted Australian retailers against Amazon, the Australian government passed a rule requiring that Amazon collect and remit the 10% VAT on its worldwide sales to Australians. Rather than comply, Amazon has blocked Australians from shopping anywhere except its Australian storefront.

From what I can tell, the Australian government did a reasonably good job of implementing this rule. The alternative is to hold international purchases in customs warehouses and send tax-demands to the purchasers, along with a handling fee (often $5-10), which may have to be paid in person after lining up at a post-office. Such a system (which is pretty typical around the world) would have a much more negative effect on Amazon's sales than merely assessing the tax on global purchases when the shipping address is in Australia.

Amazon clearly sees this as the thin edge of the wedge, though, and doesn't want to get in a position of having to collect variable rates of tax depending on the shipping address for, say, 180 countries (or even thousands of states and provinces with their own VATs). This would be a tiresome set of business rules and accounting practices for Amazon to set up, but it's hardly back-breaking labor for a firm with entire buildings full of accountants who are already extremely attentive to the minutae of tax rules all over the world as they chase the most tax-advantageous way to book Amazon's income and and avoid paying tax on it.

Moreover, Amazon already attends to far more fine-grained regional restrictions than mere sales-tax rules, tracking on a country-by-country basis who can buy books, stream videos, or purchase gadgets where there are exclusive territorial rights deals. If Amazon can figure out whether a contractual arrangement struck 20 years ago at the Frankfurt Book Fair allows an Australian to buy one individual book out of ten million books at all of their worldwide stores, they can certainly keep track of whether they need to charge that Australian sales tax before they sell it to them.

This so-called "Amazon tax" was brought in after heavy lobbying by local retailers – which have to apply GST to all sales, whether online or in store – to "even the playing field" with international online rivals.

"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 spokeswoman said.

Treasurer Scott Morrison slammed Amazon for being unwilling to collect GST while other online retailers worked with the system.

"The second biggest company in the world, run by the richest man in the world (Jeff Bezos) shouldn't get a leave pass from paying tax in Australia," Mr Morrison said.

Amazon to block its US website for Aussie shoppers over new GST rules [Patrick Hatch/Sydney Morning Herald]

(Thanks, Christian T Zappone!)