The Government admits it has no way of policing whether foreign companies pay GST on goods sold online to New Zealanders.
Revenue Minister Stuart Nash noted the government would be trusting retailers to add the tax as it would be hard to enforce in overseas jurisdictions.
The world will only become more globalised and more connected.
"That's a bit cheeky of New Zealand. this strikes me more as the government had to do something, and at least this is something so the government can claim they're at least trying to do something". New Zealand's GST is a broad-based consumption tax with few exemptions.
New Zealand proposes "Amazon tax" imposing GST on low-value offshore sales
Mr Keating said the system was based on the so-called 2016 "Netflix tax". "We are now calling for feedback on a system to register these suppliers for GST".
"If you're buying something on Amazon, it will be Amazon's responsibility to pay tax on that".
"The theory is that they are required to register although obviously being non-residents or outside New Zealand they would be beyond the reach of Inland Revenue so there's nearly nothing Inland Revenue can do to them".
The previous Government dithered on this issue for many years, and it has seriously impacted New Zealand retail businesses for a long time.More news: Tom Brady will play on for the New England Patriots
This morning, Mr Nash will have his moment. There is no change to the tax treatment of goods valued above $400, where the current process for collecting GST and tariff duty at the border will continue.
"It's very symbolic for us, it's a change that our street customers have been needing", she said.
"They do not like to be seen to be reneging on their tax obligations anywhere round the world so they do comply", he said.
"We're under no misapprehension this may make a major difference in terms of people's online spending, hopefully just prioritising more here in New Zealand". The group also supported the government keep reviewing options to collect GST between the point of sale and delivery, and after delivery.More news: SPDR Russell 1000 Momentum ETF (ONEO) Rises 0.28% for May 2
Currently, all overseas purchases of less than $400 are exempt from GST because of the cost of administering the tax.
In a letter to ministers Grant Robertson, Nash and Whaitiri received on February 28, group chair Michael Cullen said the non-collection of GST was an increasing problem that needed addressing "quickly" as it created a competitive disadvantage and unfairness for local retailers and an expanding hole in the Crown's coffers.More news: Black men arrested in Starbucks settle with Philadelphia for $200K youth program