Interim digital services tax to be implemented ahead of OECD work

On 18 February 2019, the New Zealand government announced that it will issue a discussion document for consultation
in May on the introduction of a digital services tax (DST). The DST is targeted at multinational companies offering social media networks, trading platforms and online advertising in New Zealand. Although the New Zealand government is committed to working with the OECD on a global solution (known as BEPS 2.0), there is concern that agreement could be several years away.

Until now, tax policy officials have been keeping a watching brief on other countries that are implementing unilateral measures. The New Zealand government feels that there is enough critical mass and that the
country should move ahead with its own work and be ready to implement the DST. It is intended that a New Zealand DST be introduced as an interim measure until the OECD reaches a consensus. Estimates are that if a DST is set at a range of between 2% to 3% of digital revenues, it could raise between NZD 30 million to NZD 80 million, but this will depend on how the tax is designed. Any proposals will go through a full consultation and legislative process, although the Minister of Revenue has suggested that the DST could be implemented and ready to apply from sometime in 2020.

March 2019 Tax Alert contents

• Taxing your Airbnb and family bach
• Changes for residential rental owners from 1 April 2019
• Tax is changing - for everyone
• How will a CGT affect your lifestyle block or home office?
• The Commissioner can't have her cake and eat it too...
• A Snapshot of Recent Developments