18 Feb 2019
New Zealand’s government has announced plans of implementing further taxes on online giants such as Google or Facebook, the Financial Express reports.
Prime Minister Jacinda Ardern pointed out the need to close an unjust gap that has companies like such recording high earnings yet paying little tax.
“Our current tax system is not fair in the way that it treats individual taxpayers and the way that it treats multinationals,” she said.
Ardern said the proposed digital services tax would tax multinational online companies at around 2-3% on revenue generated in New Zealand. This measure falls in line with what has been implemented in other countries.
Revenue Minister Stuart Nash said foreign online companies have a competitive advantage over local companies that pay higher taxes, adding that the new tax could begin to take place from next year.
Nash revealed that New Zealand will continue to cooperate with the Organization for Economic Cooperation and Development (OECD) to continue looking for ways to deal with this problem – however, New Zealand will not wait around, saying: “The OECD can move at a rather slow rate.”
New Zealand’s government estimates that online multinationals generate around 2.7 billion NZ dollars’ worth of business in the country each year, and that the new tax could generate up to 80 million NZ dollars on a yearly basis.
The latest figures made available reveal Google paid up NZ$392,000 in income taxes for 2017, while in 2014, Facebook paid NZ$43,000 in taxes.
Highly digitalised companies currently earn a high income from New Zealand consumers without being held accountable to pay income tax, the government said in a statement released after the announcement.