We're no GST police, Visa tells govt

We're no GST police, Visa tells govt

Summary: Visa has told the Productivity Commission in no uncertain terms that it cannot and will not enforce the collection of the goods and services tax (GST) on customers who purchase goods online from offshore sites for fear of legal and reputational ramifications.


Visa has told the Productivity Commission in no uncertain terms that it cannot and will not enforce the collection of the goods and services tax (GST) on customers who purchase goods online from offshore sites for fear of legal and reputational ramifications.

In a letter addressed to the Productivity Commission, Adam Wand, Visa's head of Public Affairs, Australia, New Zealand and South Pacific, said that any plans to charge GST to customers at a card level presents a mammoth technical undertaking for the company.

Wand explained that when a Visa customer makes a purchase internationally, the payment is processed through the bank of the vendor receiving the payment (the acquiring bank). That bank sends a request for the purchase amount into the international processing system called VisaNet, which then approves the purchase. Wand said that the VisaNet system does not facilitate a detailed breakdown of a customer's purchase — an element crucial for applying GST to a purchased item.

"For example, a transaction between an Australian online shopper and an online trader based in Germany for $122.50 may be entered into VisaNet by a German acquiring bank.

"However, from this entry, it is not possible to extrapolate that the imposition of a 10 per cent GST levy would require the transaction to be increased by $12.25, as the original amount of $122.50 will have almost certainly have been made up of goods, some of which may have been and some of which may not have been subject to GST," Wand explained.

In order to collect GST payments, Visa would need to implement a complex data entry system for over 200 different jurisdictions, into which vendors would have to add the information necessary to collect GST on their sold items. Visa said that such a vendor-reliant system would not be accurate.

"It is almost certain that the GST amounts collected would frequently be incorrect. Equally, GST would likely be erroneously collected on a range of items that are considered GST exempt," Wand said in the letter.

"These errors would expose Visa to considerable and unacceptable legal and also reputational risk."

Overseas and online retailers who don't pay GST have drawn the ire of Australia's outspoken retailer community, including Gerry Harvey and Myer CEO Bernie Brookes. The Productivity Commission is examining the issue in its "Economic Structure and Performance Review".

Harvey has since decided to fight fire with fire, launching a daily deals site and an online store based out of southern China, which will dodge the GST.

Harvey set his online team a target of reaching $1 billion in revenue over the next decade, but stayed mum on how it would get there.

Topics: Government, E-Commerce, Government AU

Luke Hopewell

About Luke Hopewell

A fresh recruit onto the tech journalism battlefield, Luke Hopewell is eager to see some action. After a tour of duty in the belly of the Telstra beast, he is keen to report big stories on the enterprise beat. Drawing on past experience in radio, print and magazine, he plans to ask all the tough questions you want answered.

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  • Oh come now, stop this endless and pointless whineing and griping about the GST. Traditional retailers need a plausible excuse so their shareholders do not hold their management responsible for declining retail sales. As the application or otherwise of the GST is beyond their control, it is a prefect excuse especially since they know that the government has no intention of changing anything, so the excuse will have a long life.
    The bottom line is that in a globalised world where Texas USA and Texas Queensland are effectively transparent to an online shopper, Australia's inefficient and productivity compromised economy simply does not have the capacity to compete. Applying or not the GST won't make one scintilla of difference. Our retail landscape will have to reinvent itself and whether retail in 2020 looks like retail in 1980, only time will tell.
  • so..if a person from australia buys something whilst overseas on credit card...he/she will pay tax on that product in that country and still taxed GST in Australia even if that Goods or service was consumed overseas.....lazy friggin government always tries to get everyone else to do their dirty work...and we all know its not about GST but the whingeing "Harvey Normans" of this country who still wan to make 300% on a product. I can get Quicksilver/Billabong/Ripcurl wetsuits (all australian companies) at half and sometimes 1/4 the price in the states of those charged in Australia...I stopped shopping at Harvey Useless about 10 years ago due to poor service....its about time companies stopped thinking that 300% profit is expected..expect 30%..no more...how about the Gov tries to get the real tax evaders..the tradesmen who say "10% disccount for cash" as they know that if they get cash they dont have to pay any tax on their goods and services (10% plus it wont appear on their income tax)...GST didnt stop that ...its still being rorted everywhere, restaurants, tradies etc...the only honest ones are PAYEE employees (cos we cant rip the system off like everyone else in the country is so we pay huge taxes to compensate)..if we can get goods o/s for cheaper then so be it...Its in my best interest to save as much as possible.