WANAN YOSSINGKUM/iStock via Getty Images
New Zealand is set to introduce a legislation this week to impose a digital services tax on large multinational corporations, but the tax will not come into effect until 2025, Bloomberg News reported.
The proposed levy would be payable by multinational companies which generate over €750M ($810M) a year from global digital services and over NZ$3.5M ($2M) a year from digital services provided to New Zealand users, the report added citing Finance Minister Grant Robertson.
The tax would be applied at 3% on gross taxable New Zealand digital services revenue, similar to the taxes in other countries such as France and the U.K., and is expected to generate NZ$222M over four years, Robertson said.
Governments globally are worried that companies such as Google, an Alphabet (NASDAQ:GOOG) (GOOGL) unit, and Facebook, owned by Meta Platforms (NASDAQ:META), do not pay enough tax or do not pay it in the right places, and that current global tax regulations don’t appropriately grasp the way these companies make money, the report noted.
“With more and more overseas businesses embracing digital business models, our ability to tax them is restricted and the burden falls to smaller groups of taxpayers,” said Robertson.
New Zealand’s government has been participating in negotiations at the OECD for a multilateral agreement on how to address these issues, however, Robertson noted that progress has been slow.
