New Zealand targets internet giants with taxes

New Zealand said on Monday that it plans to update its laws so it can tax revenue earned by multinational digital firms such as Google, Facebook, and Amazon, extending a global effort to bring global tech giants into the tax net.

"Our current tax system is not fair in the way it treats individual taxpayers, and how it treats multinationals," Prime Minister Jacinda Ardern told reporters at her weekly post-cabinet news conference.

Ardern announced that New Zealand will consult on the design of changes to tax rules which currently allow multinational companies in the digital services field to do business here, without paying income tax.

She revealed Cabinet had agreed to issue a discussion document about how to update New Zealand's tax framework to ensure multinationals pay their fair share of tax.

"Highly digitalized companies, such as those offering social media networks, trading platforms, and online advertising, currently earn a significant income from New Zealand consumers without being liable for income tax.

She said the current tax system was not sustainable and it's a gap this government thinks should close.

She said a number of other countries are looking at similar taxes, such as Australia and certain European countries.

The value of cross-border digital services in New Zealand is estimated to be around NZ$2.7 billion ($1.86 billion).

The revenue estimate for a digital services tax is between NZ$30 million and NZ$80 million, Finance Minister Grant Robertson said in the statement.

Ardern said cabinet had been discussing this for some months.

Ardern said the tax would be 2-3 percent - in line with that of other countries that have looked into a similar tax.

A number of countries including the U.K, Spain, Italy, France, Austria, and India have enacted or announced plans for a DST. The EU and Australia are also consulting on a DST.