Amazon reverses tax-triggered block on US shop in Australia

Amazon has reversed a decision it made six months ago to shut off its US ecommerce site to Australian shoppers. Reuters reports that the U-turn comes after a customer backlash.

Since July shoppers in Australia trying to browse stuff to buy on Amazon.com have been redirected to the local site, Amazon.com.au.

Shipping to Australia from Amazon.com was also shut off at the same time. So shoppers were limited to buying goods sold by local sellers.

But from today the block has gone.

The geoblock on Amazon.com followed a change in Australian tax regulation requiring businesses earning more than $75,000 AUD per year to charge its 10% Goods and Services Tax (GST) on low value items imported by consumers.

The so-called ‘Amazon Tax’ was drawn up in response to concerns about the impact of Amazon and other large overseas ecommerce businesses on local retailers which have to apply GST to all products they sell.

A loophole had meant GST was only applied to items purchased from overseas retailers worth $1,000 AUD or more — so local competitors argued it gave Amazon, eBay and other overseas competitors an unfair advantage.

Amazon’s response was to shutter its overseas shops. But by limiting shoppers to the inventory on its Australian site, which only launched in December 2017, the ecommerce giant seems to have shot its local business in the foot — encouraging locals to look elsewhere for their retail fix. Or just not buy as much stuff.

The Guardian notes there are only about 80 million products on the Australian store vs 500 million on the US site.

Six months later Amazon has backtracked. And seemingly decided to suck up the 10% tax after all.

We’ve reached out to the company for a comment.

An Amazon spokesman told Reuters it had changed its mind after listening to customer feedback, adding it had built the “complex infrastructure needed to enable exports of low-value goods to Australia and remain compliant with [local] laws”.

So far only products sold by Amazon itself on Amazon.com are being made available for purchase by Australians, with third-party sellers not yet covered.

Notably — on the U-turn timing front — Black Friday is tomorrow.

Aka the day when retailers attempt to kick start a holiday buying bonanza by slashing a bunch of prices and scattering digital tinsel all over their online channels. Clearly Amazon doesn’t want to miss out on more sales.