New Zealand to Target Online Giants With Digital Tax

New Zealand stated on Monday it plans to upgrade its legislation so it could tax earnings earned by multinational electronic companies such as Google, Facebook, and Amazon, expanding a worldwide effort to bring international technology giants to the tax net.

Prime Minister Jacinda Ardern said the cabinet had agreed to issue a discussion document about how to update the country’s tax framework to ensure multinational companies pay their fair share.

“Our current tax system isn’t fair in the way it treats individual tax payers, and the way that it treats multinationals,” Ardern told reporters at her weekly post-cabinet news conference.

Highly digitalised businesses, like those offering social networking networks, trading platforms, and online advertising, currently earn a considerable income from New Zealand customers without being answerable for income taxation, the government said in a statement published following the statement.

The worth of cross-border electronic services in New Zealand is estimated to be approximately NZD 2.7 billion ($1.86 billion).

The earnings estimate for a digital services taxation is between NZD 30 million and NZD 80 million, Finance Minister Grant Robertson said in the statement.

Digital services taxation (DST) are generally charged at a set rate of just two to three percent on the gross earnings earned by a multinational company in that nation.

A number of nations including the UK, Spain, Italy, France, Austria and India have enacted or announced plans for a DST. The EU and Australia are also consulting on a DST.

Officials will finalise the New Zealand discussion document about the matter, which is likely to be publicly published by May 2019.