New Zealand to consider digital tax overhaul

19 Feb 19

New Zealand plans to update its laws to tax revenues earned by huge digital firms, in line with international efforts to make multinational tech companies pay fair taxes.

The country’s prime minister Jacinda Ardern said the cabinet had agreed to start a discussion about how to update the tax framework to ensure multinational tech firms, such as Google, Facebook and Amazon, pay fair taxes.

She told reporters at her weekly news conference: “Our current tax system is not fair in the way it treats individual tax payers, and how it treats multinationals.”

Digital companies, such as social media networks and online advertisers, currently earn a significant income from consumers in New Zealand without being liable for income tax, the government said in a statement.

The value of cross-border digital services in New Zealand is estimated to be around NZ$2.7bn ($1.86bn).

Finance minister Grant Robertson said the revenue from a digital services tax would equate to between NZ$30m and NZ$80m.

A number of countries, including the UK, Spain, Italy, Austria and France, have also announced plans for or introduced a digital service tax. The European Union and Australia have also consulted on the issue.

The digital service tax is generally charged at a flat rate of 2-3% on the gross revenue earned by the company in that country.

Officials in New Zealand will finalise a discussion document on a digital tax, which is likely to be released to the public by May this year.

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