Chapter 5 - Conclusion

• Next steps and timing

5.1 The Government supports an OECD led international solution to the problems of taxing the digital economy. This would integrate the taxation of the digital economy into the income tax system, and so avoid the need for a separate DST with all its related issues. An international solution would also allow any income tax payable in New Zealand to be credited overseas, thus avoiding double taxation. Finally, it would provide a common international basis for the taxation of the digital economy, rather than a patchwork of separate taxes.

5.2 Therefore, the Government proposes continuing to participate in the OECD discussions with a view to supporting an international solution (bearing in mind its effect on our export sector).

5.3 However, the Government will seriously consider adopting a DST if the OECD cannot make sufficient progress this year. Factors to be considered in making this decision are:

• whether the OECD can make sufficient progress on an international solution this year;
• whether a critical mass of other countries also adopts DSTs (to reduce the reputational risks of adopting a DST);
• whether New Zealand companies would be unduly affected by a DST; and
• whether a DST would all be passed on to New Zealand consumers.

Next steps and timing

5.4 The Government will use the feedback received on this discussion document to make its final policy decisions. At this stage, we anticipate a decision on the adoption of a DST in the second half of 2019.

5.5 If the Government does decide to adopt a DST, then its introduction would go through the generic tax policy process. This means the public would have a further opportunity to submit on the design of the DST (either at the Select Committee stage, or earlier). The legislation for any DST would probably be introduced in 2020.