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Tuesday, June 04, 2019, 18:00
NZ govt proposes 'Facebook Tax' options for digital giants
By Xinhua
Tuesday, June 04, 2019, 18:00 By Xinhua

New Zealand's Finance Minister Grant Robertson talks to reporters and analysts about the budget, while other lawmakers sit next to him, May 30, 2019, in Wellington, New Zealand. (NICK PERRY / AP)

WELLINGTON - The New Zealand government has proposed two options for a Digital Services Tax (DST) on Tuesday to ensure multinational companies pay their fair share of tax.

Our number one preference remains an internationally agreed solution through the OECD. However if the OECD cannot make sufficient progress this year we need an interim solution 

Grant Robertson, Finance Minister

The DST, widely known as "Facebook Tax", was first announced by Prime Minister Jacinda Ardern in February, saying her government would release a discussion document canvassing the possible new tax upon global digital giants, which do substantial business in New Zealand but pay no tax on income or revenues. These companies include Facebook, YouTube and eBay.

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Finance Minister Grant Robertson and Revenue Minister Stuart Nash proposed on Tuesday two broad options to ensure offshore digital companies no longer enjoy tax breaks which are not available to local businesses.

Changing the current international income tax rules to allow more taxation in market countries is one option, which is currently being discussed by the Organization for Economic Cooperation and Development (OECD) and the G20 large economies.

Applying a separate DST to certain revenues earned by highly digitalised multinationals operating in New Zealand is another option, which is now seeking feedbacks.

"Our number one preference remains an internationally agreed solution through the OECD," said Robertson, "However if the OECD cannot make sufficient progress this year we need an interim solution. Other nations have already taken this step."

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Robertson reiterated the importance of protecting New Zealand economy through a fare tax system.

"Modern business practices, digitalisation in particular, mean that a company can be significantly involved in the economic life of a country without paying tax on income or turnover."

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