New Zealand told that they have plans of updating their laws so as to tax revenue which is earned by multinational digital firms like Google, Facebook, and Amazon, which is their global effort to bring the global tech giants into their tax net.
Prime Minister Jacinda Ardern told that the cabinet had agreed to issue a discussion document regarding updating the country’s tax framework which will ensure that these multinational companies will pay their fair share.
During the weekly post-cabinet news conference, Ardern said- “Our current tax system hasn’t been fair in the way it treats individual taxpayers, and how it treats multinationals companies.”
Highly digitalised companies which have been offering social media networks, trading platforms, as well as online advertising, currently earn a significant income from New Zealand consumers without being eligible for income tax.
The value of cross-border digital services in New Zealand has been estimated to be about NZD 2.7 billion (approximately $1.86 billion). The revenue estimate for a digital services tax is in the range NZD 30 million and NZD 80 million, said Finance Minister Grant Robertson during a statement.
Digital services taxes (DST) is generally charged at a flat rate of two or three percent on the gross revenue which is earned by a multinational company of that country. Countries such as the UK, Spain, Italy, France, Austria, and India have enacted or announced their plans for a DST. The EU and Australia have also begun consulting a DST.
Officials will soon be seen finalizing the New Zealand discussion document on the matter, and it could be publicly released by May 2019.