New Zealand has announced its intention to introduce legislation for a digital services tax targeting large multinational corporations starting in 2025. This decision comes after global talks at the Organization for Economic Cooperation and Development (OECD) failed to reach a consensus for a coordinated rollout of such a tax.

The 2021 agreement reached by over 140 countries aimed to modernise outdated taxation rules for multinational companies, particularly those in the digital sector like Apple and Amazon. However, the implementation of this agreement was postponed last month as countries with existing digital services taxes, except for Canada, agreed to delay their application for at least another year.

New Zealand’s Finance Minister, Grant Robertson, emphasised that while the country is committed to supporting a multilateral agreement, it cannot wait indefinitely. He noted that the proposed tax aims to ensure that large multinationals pay their fair share of taxes, similar to everyday citizens.

The digital services tax proposal targets multinational firms that earn income from New Zealand users of social media platforms, search engines, and online marketplaces. It will be applicable to businesses generating over €750 million (US$812 million) in global digital services income and over NZ$3.5 million annually from digital services provided to New Zealand users. The expected revenue from the tax over a four-year period is NZ$222 million.

The tax rate will be set at 3% of gross taxable New Zealand digital services revenue, aligning with rates adopted by countries like France and the United Kingdom. The bill introducing this tax is scheduled to be presented to the New Zealand Parliament on Thursday.