Australian Amazon users to be geo-fenced after government extends purchase tax

Amazon responds to extension of Goods and Services Tax (GST) by barring Australians from Amazon.com and Amazon.co.uk

Users of Amazon.com in Australia are to be shut out of the US store and geo-genced to Amazon.com.au. The move comes after the country extended its Goods and Services Tax (GST) to online purchases worth less than A$1,000 bought outside of Australia.

And the ban will apply to Australians looking to purchase goods from Amazon.co.uk, too.

The extension of the tax follows lobbying by retailers within Australia. While GST - very broadly speaking, Australia's equivalent of Value Added Tax (VAT) - applies to purchases made in-store and online in Australia, it hasn't applied to purchases made overseas of under A$1,000.

The new measure will be introduced on 1 July and, while Amazon will geo-fence users in Australia and not ship goods to the country, other online stores haven't yet responded.

Australians are, understandably, unhappy at the move. They claim that a lack of choice and higher prices on Amazon.com.au is forcing them to look overseas for the products they want to buy.

According to the Sydney Morning Herald, while Amazon.com.au claims to sell more than 60 million products, Amazon.com offers more than 500 million.

Australians also complain that they are forced to pay high prices for a range of goods in the country, particularly IT hardware.

EBay, meanwhile, said that rather than prevent Australians from purchasing goods on its website, it was working on a way to collect GST and remit it to the Australian government.

"This requires major changes to eBay's global systems and we are working to have these ready by 1 July," an eBay spokeswoman told the Sydney Morning Herald, adding: "EBay's GST solution will allow us to collect GST in any currency, from any seller, from any eBay site."

Amazon had argued against such a model, calling it "fundamentally flawed" because it required voluntary compliance from offshore online vendors. It argued it would lose out as buyers sought out those sellers on the grounds of lower prices.

While Australians have been critical of the extension of the tax, some criticism has also been directed at Amazon, suggesting that it is a cynical attempt to push them into using the Amazon.com.au.