NEW ZEALAND: In a recent announcement, New Zealand unveiled its strategy to introduce a digital services tax aimed at major multinational corporations, beginning in 2025.
This decision comes after global discussions regarding a coordinated rollout failed to achieve consensus at the Organisation for Economic Cooperation and Development (OECD).
Originally, more than 140 nations were poised to enact an agreement in 2021 that would modernize outdated regulations governing the taxation of multinational corporations.
These regulations have become obsolete in light of the ability of tech giants such as Apple and Amazon to channel profits through low-tax jurisdictions.
However, last month, the agreement was postponed when all nations with digital services taxes, except Canada, agreed to delay their enactment by another year.
Finance Minister Grant Robertson emphasized New Zealand’s stance, stating, “While we will keep working to support a multilateral agreement, we are not prepared to simply wait around until then to find out.”
Robertson expressed concerns over the lack of tax liability for large multinationals, despite ordinary citizens paying their fair share of taxes.
The proposed digital services tax targets international companies that generate revenue from New Zealand users through social media platforms, search engines, and online stores.
Corporations with an annual global digital services revenue of over 750 million euros (approximately $812 million) and New Zealand service revenue exceeding 3.5 million New Zealand dollars ($3.5 million) will fall under the scope of this tax. Over a span of four years, this tax is projected to generate around NZ$222 million.
The tax rate, set at 3%, will be applied to the gross taxable revenue derived from digital services in New Zealand. This rate is aligned with similar measures adopted by other nations, such as France and the United Kingdom.
The move represents New Zealand’s effort to ensure that multinational corporations contribute their fair share in taxes while operating within the country’s digital landscape.
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