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Inland Revenue

Tax Policy

CAB-19-MIN-0041 – Minute: Options for taxing the digital economy

Date 18 February 2019
Reference CAB-19-MIN-0041
Document type Cabinet minute
Title Options for taxing the digital economy
Downloads PDF (125 KB)
DOCX (42 KB)

This document contains information for the New Zealand Cabinet. It must be treated in confidence and handled in accordance with any security classification, or other endorsement. The information can only be released, including under the Official Information Act 1982, by persons with the appropriate authority.

Options for Taxing the Digital Economy

Portfolios Finance / Revenue

On 18 February 2019, Cabinet:

1 noted that the government is considering measures recommended by the Tax Working Group to improve the New Zealand tax system;

2 noted that there is a problem with the current taxation of the digital economy, both in New Zealand and internationally;

3 noted that a number of countries, including Australia, are investigating or implementing digital services taxes (DSTs);

4 agreed that New Zealand should continue to participate in the OECD discussions on the taxation of the digital economy, with a view to supporting a long-term solution (bearing in mind its effect on New Zealand exporters);

5 agreed that the government should also actively consider a possible DST as an option for taxing the digital economy, in case the OECD are unable to achieve sufficient progress in 2019;

6 directed officials to draft a discussion document to get public feedback on the options for taxing the digital economy (being the international solution and the DST);

7 agreed that the discussion document should state that:

7.1 the government is determined to ensure that multinational companies pay their fair share of tax in New Zealand;

7.2 the government is actively considering introducing a DST in advance of an international solution. While New Zealand is committed to finding a solution at the OECD, if sufficient progress is not made in 2019, a DST is a credible option;

7.3 the government sees real benefits in aligning New Zealand’s position on a DST with Australia;

7.4 the DST initially proposed would be like the one proposed by the United Kingdom;

7.5 the DST would be an interim measure that would cease to apply once an international solution was adopted;

7.6 the government would aim to design the DST so that it was consistent with New Zealand’s international obligations (which is expected to be possible);

8 authorised the Prime Minister, Minister of Finance and the Minister of Revenue to decide when the discussion document will be released;

9 noted that the Minister of Finance and the Minister of Revenue, in consultation with the Prime Minister, will report back to Cabinet with a draft of the discussion document prior to its release.

Michael Webster
Secretary of the Cabinet

Hard-copy distribution:
Prime Minister
Deputy Prime Minister
Minister of Finance
Minister of Revenue