News of Zealand

New Zealand Finally Wants To Tax Internet Giants – But Not Very Much

The new tax would only earn the country up to $80 million a year.
Digital multinationals like Google will be liable for the new tax.

The Government has made an announcement on finally taxing internet giants. Yes, that’s right, huge earners like Google, Facebook, Youtube and Uber are currently allowed to do business in the country without being liable to pay income tax. But this may be all about change, as Cabinet has agreed to investigate a new tax on revenues made by multinational companies offering digital and super profitable services.


Prime Minister Jacinda Ardern said the move was about "fairness and balance in the tax system", and Finance Minister Grant Robertson also agreed the current situation was far from just and that something had to change.

However, the amount they will be taxed is currently floating at just two-to-three percent of their gross revenues. According to Government estimates, that could bring in a combined total $30-$80 million a year. This sounds like a heck of a lot, but it's actually pretty insignificant in relation to these companies’ deep pockets and the Government’s overall revenues. For example, local individual companies could pay more tax just on their own: Spinoff figures last year revealed Spark paid $139 million in tax.

A number of other countries including Australia, Britain and France have tried to implement a similar tax framework, but it’s proving difficult to enforce. Australia just managed to bring in $37 million from Google last year after getting into messy legal battles over the company’s accounting methods, NZ Herald reports.

RNZ reported this morning that the National Party fear the new tax could trigger retaliation and Kiwis could risk losing access to some global digital services. The OECD is trying to find an internationally agreed-upon solution, but until then, countries will be sorting out their individual plans. A discussion document for the updated framework will be out in May, with the plan to have the law passed by the end of next year.