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27 May 2025

New Zealand Government drops Digital Services Tax proposals

  • On 20 May 2025, the New Zealand Government announced that it has decided not to progress a Digital Services Tax Bill that would have introduced a Digital Services Tax (DST) from 1 January 2025.
  • The bill was introduced by the prior Government in 2023 but remained unenacted before Parliament.
 

The New Zealand Government announced on 20 May 2025 that it has decided not to progress draft legislation that would have introduced a Digital Services Tax (the DST Bill). If enacted, the DST Bill would have imposed a 3% tax on the gross revenue of large multinational entities (MNEs) with digitalized business models that earned income from New Zealand.

The previous Government introduced the DST Bill in 2023 with an original proposed start date of 1 January 2025. Following the 2023 General Election, the current Government reinstated the Bill, with the expectation that it could be used as a backstop if work on a multilateral solution was unsuccessful.

In his 20 May statement, Minister of Revenue, Hon Simon Watts, announced that the Government has been monitoring international developments and has now decided not to progress the DST Bill.

As a consequence, the DST Bill has now been discharged from Parliament.

For further details on the New Zealand DST proposal, see EY Global Tax Alerts: New Zealand introduces draft Digital Services Tax legislation, dated 7 September 2023, and New Zealand Government reinstates Digital Services Tax Bill, following General Election, dated 8 December 2023.

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For additional information concerning this Alert, please contact:

Ernst & Young Limited (New Zealand), Auckland

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

Document ID: 2025-1135

 

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