New Zealand plans digital services tax for multinationals from 2025

New Zealand said on Tuesday, August 29, it would introduce legislation for a digital services tax on large multinational companies from 2025 after talks for a global rollout did not reach consensus at the Organization for Economic Cooperation and Development (OECD).

More than 140 countries were supposed to start implementing next year a 2021 deal overhauling decades-old rules on how governments tax multinationals that are widely considered to be outdated as digital giants like Apple or Amazon can book profits in low-tax countries.

But the proposal was pushed back last month after countries with digital services taxes, with the exception of Canada, agreed to hold off applying them 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.”

The proposed digital services tax will target multinational businesses that earn income from New Zealand users of social media platforms, search engines, and online marketplaces.

The tax would be payable by businesses that make over 750 million euros ($812 million) 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 NZ$222 million over four years.

The tax would be applied at 3% on gross taxable New Zealand digital services revenue, a similar rate adopted by comparable countries like France and the United Kingdom.

The bill will be introduced to the parliament on Thursday. – Rappler.com