Amazon shares closed higher in the US Wednesday, ahead of news the global tech and etailer giant plans to block Australian users from its US site from July. The move comes as Australia’s Goods and Services Tax rules will mean a 10% charge will be applied to online goods imported to the country worth below $1,000.
Amazon shares ended the US Wednesday session 0.75% higher at $1,624.89. The stock is a little lower in out-of-hours trading.
Amazon to begin geoblocking
Geoblocking, where a website can block country users from using any international sites of its online business, is the option Amazon has chosen once the new GST rules are in place from July 1, this 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,” Amazon said.
The news comes as Amazon’s Australian site has failed to impress local users. Among the complaints against the local site are the lack of choice and prices that aren’t as competitive as consumers expected.
Amazon has chosen to work around the new GST rules by ensuring Australian users can only purchase goods from its local Australian site.
However, some international goods will still be available to Australian online shoppers on a new global store platform. But, the range will be around 4 million, much reduced from the around 500 million items on the US site.
Treasury defends tax rules
While Amazon has made its decision on its GST plans, Australia’s Treasurer, Scott Morrison introduced the change to the GST rules in April 2017. Prior to that, the 10% tax was only applied to goods worth over $1,000.
According to Reuters, Morrison said Thursday that the tax change was necessary.
“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,” Morrison said.
“If multinationals aren’t forced to pay their fair share of tax, they will have a competitive advantage over retailers here in Australia, on our own main streets and in our shopping centres,” he added.