The Treasury Department has announced a review into how the 5% levy was applied to products bought from ‘offshore’ businesses, such as online retailers, and said it would like to see a ‘point-of-sale’ collection introduced, meaning GST would be charged by vendors such as Amazon and then paid to the Jersey government.
Currently personally imported goods worth less than £135 – the de minimus limit – are not subject to GST. This level was reduced from £240 last year and the department intends to lower or eliminate it altogether.
Comptroller of Revenue Richard Summersgill said that discussions would be sought with big online retailers like Amazon and eBay.
He added, however, that the move could result in certain retailers charging both VAT and GST on goods sent to Jersey customers but that the government would try to avoid this.
Officials are planning to present plans on the matter to ministers by the middle of this year but it is expected that the proposals, which would be subject to States approval and could form part of the next Government Plan, would not take effect until at least 2022.
The Treasury Department would like to follow the example of the UK and EU, both of which removed their de minimus levels on imported goods this year. The department said that removing the current limit would create a ‘level playing field’ between local retailers, who have to charge GST on their goods, while their competitors outside the Island do not.
Mr Summersgill said that changes taking place in the UK and EU should make it easier for Jersey to follow suit.
‘We’ll look at what the UK and EU are actually doing and identify options for making change in Jersey,’ he said.
‘The key change ministers want to try to make is to stop offshore retailers from charging VAT and instead to start charging Jersey GST. So, instead of charging a retail selling price that includes 20% VAT, it would include 5% GST.
‘In an ideal world, we would hope for some of the larger retailers to do so at the point of sale in the overseas jurisdictions and that they would send that money directly to the treasury here in Jersey.
‘What a Jersey consumer would see when they go onto a website to order goods is that they were being charged GST.’
Mr Summersgill said that such a system, combined with recent improvements in Customs procedures, would mean that the cost of recouping GST on lower-value items would not outweigh the increased tax take.
He added, however, that there was ‘nothing in UK law’ that would stop a UK retailer from charging VAT on goods shipped to Jersey, in which case Islanders could end up paying both taxes.
The UK removed its de minimus limit of 22 euros for VAT on 1 January and now requires all goods worth less than £135 to be charged the tax at point of sale, while tax on more expensive items is collected upon arrival at the country’s borders.
The EU is due to introduce similar measures in July.
