After negotiations for a global rollout at the Organization for Economic Cooperation and Development (OECD) failed to reach a consensus, New Zealand said on Tuesday that it would submit legislation for a digital services tax on large multinational businesses starting in 2025.
A 2021 agreement that would change long-standing regulations on how governments tax multinational corporations is set to go into effect in more than 140 countries in 2019. This is because digital behemoths like Apple (AAPL.O) and Amazon (AMZN.O) may record earnings in low-tax nations.
However, the proposal was delayed last month after all of the nations that impose digital services taxes, with the exception of Canada, decided to postpone implementation for at least another year.
Grant Robertson, the finance minister, said in a statement that while “we will continue to work to support a multilateral agreement, we are not prepared to simply wait around until then to find out.”
“We don’t think it’s fair that average Kiwis pay their fair share of taxes but that big multinationals don’t have to pay taxes,” said one representative.
Multinational corporations that profit from New Zealanders using social media platforms, search engines, and online markets will be the subject of the proposed digital services tax.
Businesses that generate more than 750 million euros ($812 million) in annual revenue from worldwide digital services and more than NZ$3.5 million in revenue from digital services offered to New Zealand users will be subject to the levy. Over four years, NZ$222 million in revenue is anticipated.
The tax would be levied at 3% of the gross taxable revenue from digital services in New Zealand, the same amount used by comparable nations like France and the UK.
On Thursday, the bill will be presented to the parliament.
