(Reuters) – New Zealand announced on Tuesday plans to implement legislation for a digital services tax on large multinational companies starting in 2025. This decision comes after global talks at the Organization for Economic Cooperation and Development (OECD) failed to reach a consensus on a worldwide rollout.
Over 140 countries were expected to begin implementing a deal next year that would overhaul outdated rules on taxing multinational companies. These rules have become obsolete as digital giants like Apple and Amazon can currently book profits in low-tax countries.
However, the proposal was delayed last month after countries with digital services taxes, excluding Canada, agreed to postpone their implementation for at least another year.
“While we will continue to work towards a multilateral agreement, we are not willing to simply wait around until then,” said Finance Minister Grant Robertson in a statement. “We believe it is unfair for everyday New Zealanders to pay their fair share of taxes while large multinationals have no tax liability.”
The digital services tax will primarily target multinational businesses that earn income from New Zealand users of social media platforms, search engines, and online marketplaces.
To be liable for the tax, businesses must earn over 750 million euros ($812 million) annually from global digital services and over NZ$3.5 million annually from digital services provided to New Zealand users. It is estimated that the tax will generate NZ$222 million over the course of four years.
The tax rate will be set at 3% of gross taxable New Zealand digital services revenue, mirroring the rates adopted by comparable countries like France and the United Kingdom.
The bill outlining the digital services tax will be introduced to the parliament on Thursday.
($1 = 0.9232 euros)
(Reporting by Renju Jose in Sydney; Editing by Lincoln Feast)
Credit: The Star : Tech Feed
