It may also benefit Amazon's main rivals, from California-headquartered online market eBay to smaller Australian merchants which had campaigned to have the GST apply to all goods shipped from overseas.
New rules require internet retailers like the American behemoth to collect a 10 percent goods and services tax on everything bought from overseas sites from July 1, including under the current tax-free threshold of Aus$1,000 (U.S.$760).
Australian shoppers using Amazon's global site will be unable to place orders, with the retail giant stopping shipping due to new GST rules.
While we regret any inconvenience this may cause, from 1 July we will be redirecting Australian customers from our worldwide Amazon sites to amazon.com.au where you can shop for products sold by Amazon US on the new Amazon Global Store, available today.
Starting in July, Australians will be blocked from ordering items on Amazon's United States site.
"Amazon Global Store will allow Australian customers to shop on amazon.com.au for over four million items that were previously only accessible on amazon.com".
Amazon says its Australian unit offers 60 million products in 23 categories, compared to the more half a billion products on its USA site.
eBay also stated its case against the Bill which applied GST to overseas sales.
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It is understood that Amazon baulked at the massive administrative burden of tracking Australian GST from all overseas transactions.
Amazon closing its worldwide stores to Australians to avoid paying GST is disappointing but Treasurer Scott Morrison is promising there will be no exemptions.
The ABC reported a spokesperson for Treasurer Scott Morrison as saying that the new GST regulations "level the playing field" for Australian businesses, and "The government doesn't apologise for ensuring multinationals pay a fair amount of tax here in Australia".
Retail stocks on the ASX rose following Amazon's announcement.
The government would not back down on the new tax rules, which would raise AU$300 million a year, Morrison said.
A Productivity Commission inquiry concluded that given the decision to collect GST on low value imported goods, "the legislated model is the most feasible among the imperfect alternatives at this time".
Amazon said Australian customers will still be able to buy products sold by Amazon US on the Amazon Global Store.