On August 30, 2023 the New Zealand Government has introduced a Draft Digital Services Tax Bill into the House. The Bill would allow the Government of New Zealand to impose a tax on gross revenues of large multinational entities with highly digitalised business models that earn income from New Zealand.
Unlike Canada, which opened a public consultation on draft legislation introducing a Digital Services Tax, New Zealand actually was one of the 138 Members of the OECD/G20 Inclusive Framework on Base Erosion and Profit Shifting (BEPS) that agreed on the Outcome Statement recognising the progress made and allowing countries and jurisdictions to move forward with an historic, major reform of the international tax system (The Two‐Pillar Solution) of July 11, 2023.
The Digital Services Tax would be imposed at a rate of 3% on digital services revenues connected to New Zealand users or land that are derived by in-scope digital services groups. Taxable digital services revenues are revenues relating to intermediation platforms, social media and content sharing platforms, internet search engines, digital advertising and user-generated data. The tax would apply to large businesses with global digital services revenues of at least €750 million per revenue year and at least $3.5 million of New Zealand digital services revenue per revenue year.
The Digital Services Tax would be calculated based on the digital services group’s revenue year and would be paid and reported via self-assessment by the due date in the following year. Members of the digital services group would be jointly and severally liable for the DST.
The Bill would introduce consequential amendments to the Tax Administration Act 1994.
The Digital Services Tax Act would come into force on 1 January 2025. However, the Government would be able to defer this commencement date for up to five years. The Government is working with other countries at the Organisation for Economic Co-operation and Development to achieve a multilateral agreement. The Government intends to ask Parliament to repeal the Digital Services Tax when an acceptable multilateral solution is implemented.
Click here to be forwarded to the text of the Digital Services Tax Bill as introduced in the House on August 30, 2023.
Click here to be forwarded to the text of the Bill Commentary.
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