New Zealand imposes on digital services

Alex Omenye
Alex Omenye

New Zealand on Tuesday said that starting in 2025, it would enact laws imposing a digital services tax on major international corporations.

This comes after discussions at the Organisation for Economic Cooperation and Development failed to reach an agreement on a global deployment.

More than 140 nations are expected to begin implementing the 2021 agreement next year, which will update long-standing regulations on how governments tax multinational corporations. These regulations are widely regarded as being out of date because tech giants like Apple and Amazon can report income in low-tax nations.

However, the proposal was delayed last month after all of the nations that impose digital services taxes, with the exception of Canada, decided to postpone implementation for at least another year.

“While we will keep working to support a multilateral agreement, we are not prepared to simply wait around until then to find out,” Finance Minister, Grant Robertson said in a statement.

“We don’t think it’s fair that everyday Kiwis pay their fair share of taxes but there’s no tax liability for large multinationals.”

Multinational corporations that profit from New Zealanders using social media platforms, search engines, and online markets will be the subject of the proposed digital services tax.

Businesses that generate more than 750 million euros ($812 million) in annual revenue from worldwide digital services and more than NZ$3.5 million in revenue from digital services offered to New Zealand users will be subject to the levy. Over four years, NZ$222 million in revenue is anticipated.

The tax would be levied at 3% of the gross taxable revenue from digital services in New Zealand, the same amount used by comparable nations like France and the UK.

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