EU move means GST could be charged on all online shopping – Maclean

Friday 20 November 2015

Islanders will have to pay GST on all online shopping because of changes in EU rules, Treasury Minister Alan Maclean revealed in a speech yesterday.

In a speech to the Chamber of Commerce, the Senator said that there was a move in Europe to end the value thresholds, below which sales tax does not get charged on online shopping.

He also confirmed that the ongoing States reform project would cut a total of 165 jobs this year with a saving of £7.7 million per year, had halved the number of internal policies, and significantly reduced the office space used by the Jersey Property Holdings, Customs and Home Affairs departments.

Last year, the Treasury revealed that it was reviewing the current £240 value threshold for GST on online shopping as part of the ongoing work by ministers to try to help the struggling retail industry, to see whether the limit should be maintained, dropped or even scrapped entirely.

At the moment, you can order anything worth less than £240 without paying 5% GST under a system called “de minimis limits”, which is a way of getting around the administration and paperwork for paying tax on small items.

The limits were set up because the cost of processing the tax on a small item like a book or make-up is actually more than the tax received.

Figures last year showed that removing the limit entirely would earn almost £800,000 for the taxman, it would mean a big increase in workload at Jersey Post and the Customs, meaning more staff.

But that means that online retailers can undercut local shops, which have to charge 5% GST – and that has heaped pressure on traders here in Jersey.

The EU has yet to say when or how a system that requires online retailers to charge sales tax on all orders, even those worth only a few pounds, would be established, or how it would work.

In response to a question from the floor after his speech to the business lobby group, Senator Maclean said: “There has been a lot of debate about this in Europe as I am sure that Chamber of Commerce members will be aware.

“Effectively they have suggested that they are going to go to zero. They have not supplied any detail as to how that is going to be done.

“Once that is delivered, we will have to come into line.

“I don’t think that it would be particularly advantageous for Jersey to commit to lead on this. There seems to be a mood across Europe, and I am sure we will follow on from that. I am sure it will materialise.”

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