The Government has announced steps to tax the international digital economy.
Implementation, though, will be withheld if the global community produces a multilateral solution to this problem.
Finance Minister Grant Robertson says a Digital Services Tax (DST) on large multinational companies would be fairer for everyday New Zealanders who might otherwise have to pay more than their share.
“It’s clear that the international tax framework hasn’t kept pace with changes in modern business practice and with the increasing digitisation of commerce," Robertson says.
“This is a problem faced by countries across the world. With more and more overseas businesses embracing digital business models, our ability to tax them is restricted and the burden falls to smaller groups of taxpayers."
Robertson says New Zealand has been trying to deal with this problem by joining multilateral negotiations at the OECD. But he says these talks have been making slow progress.
"As part of these negotiations, we have agreed not to bring in a unilateral measure such as DST until 1 January 2025.
“While we will keep working to support a multilateral agreement, we are not prepared to simply wait around until then to find out. That is why we have prepared legislation that is ready to go if the OECD process does not succeed."
Robertson says the proposed DST would target large multinational businesses that earn income from New Zealand users of social media platforms, internet search engines, and online marketplaces.
It would be payable by multinational businesses that make over 750 million euros a year from global digital services and over NZ$3.5 million a year from digital services provided to New Zealand users.
It is expected to generate $222 million over four years. .
The tax would be applied at 3% on gross taxable New Zealand digital services revenue, which is similar to rates applying in France and the UK.
It would be aimed to future-proof New Zealand's tax system for generations to come.
The Digital Services Tax Bill will be introduced to the House on Thursday.
9 Comments
Yes - the bit you cut from the start of the quote. The $3.5 million is a selection criteria i.e. companies earning more than that may be captured by the tax.
"It would be payable by multinational businesses that make over 750 million euros a year from global digital services and over NZ$3.5 million a year from digital services provided to New Zealand users.
It is expected to generate $222 million over four years"
France, Canada & NZ vs the USA...probably won't end well
\Canada’s Proposed Digital Services Tax: A Poor Solution in Search of a Problem – IEDM/MEI
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