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December 8, 2023

New Zealand Government reinstates Digital Services Tax Bill, following General Election

  • The new Government has chosen to reinstate the Digital Services Tax Bill, which lapsed with the suspension of Parliament ahead of the General Election in October 2023.
  • The Digital Services Tax Bill proposes to implement a flat 3% digital services tax, if insufficient progress is made toward implementation of Pillar One of the OECD's Two-Pillar multilateral solution.
  • The proposed application date (1 January 2025) could be deferred by up to five years.

Executive Summary

Following the formation of a new coalition Government and the reconvening of Parliament, the Digital Services Tax (DST) Bill has now been reinstated in New Zealand, meaning work on its enactment can resume.

The New Zealand Parliament was suspended ahead of the General Election, held on 14 October 2023. At that point any remaining unenacted bills lapsed, including the DST Bill, which would introduce a DST into New Zealand domestic tax law if insufficient progress is made toward the implementation of Pillar One of the Organisation for Economic Co-operation and Development's (OECD's) Two-Pillar multilateral solution.

The DST Bill does not represent a definitive commitment to impose a DST. Instead, it is intended to serve as a backstop and provide the Government with legislative flexibility if an acceptable multilateral solution cannot be implemented within a reasonable timeframe.

The timeframe for enactment of the DST Bill at this stage is therefore unclear.

Detailed discussion

The DST Bill introduced in September 2023, proposes to implement a flat 3% digital services tax on the gross digital services revenue of large multinational groups (MNE groups) if that revenue is attributable to New Zealand users or land.

The DST has a proposed application date of 1 January 2025. This date could be deferred by up to five years, with the latest possible implementation date being 1 January 2030. This would allow the DST to be deferred if the Government sees sufficient progress toward implementation of Pillar One of the OECD's Two-Pillar multilateral solution.

The DST Bill was introduced just ahead of the suspension of Parliament preceding the General Election. As is ordinary custom, all uncompleted legislation (bills that have been introduced but not enacted by the previous Government) lapsed. Parliament has resumed sitting, under the leadership of a new coalition Government, which has now chosen to reinstate the DST Bill, as is. Further amendments to the proposals set out above can be expected to be made as the Bill progresses through the Select Committee phase and is opened up to public submissions.

Further details will emerge as the Bill progresses through later stages of the legislative process, likely in 2024.

For a more detailed discussion on the proposed New Zealand DST, see EY Global Tax Alert, New Zealand introduces draft Digital Services Tax legislation, dated 7 September 2023.

Next steps

The DST Bill has not yet been referred to Select Committee for consideration of public submissions. This may occur in the first quarter of 2024.


For additional information with respect to this Alert, please contact the following:

Ernst & Young Limited (New Zealand), Auckland

Published by NTD’s Tax Technical Knowledge Services group; Carolyn Wright, legal editor


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