GST on all online orders to level the playing field?

Friday 22 August 2014

All online shopping could be hit with GST under plans to review import rules to help struggling local retailers.

The Treasury department is reviewing the current £240 value threshold 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, so the government would be losing money every time.

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 review of the thresholds was signalled in a ministerial response to a Scrutiny report on retail policy, and is due to be completed by the end of the year.

The response by Treasury Minister Philip Ozouf and Economic Development Minister Alan Maclean explained that the issue was a complicated one – although 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.

The response from Senator Ozouf said: “As a result of research undertaken by the Customs and Immigration Service, based on 2012 data, it is estimated that if the de minimis limit was removed, then the potential extra import GST revenue would be £783,000 per annum.”