The Asia Internet Coalition (AIC) has submitted comments to the Inland Revenue Department (IRD) on the Discussion Document for the role of digital platforms in the taxation of the gig and sharing economy (“Discussion Document”).
First and foremost, we commend New Zealand’s efforts on developing the Discussion Document, with an aim to build a productive, sustainable and inclusive economy, while at the same time supporting a sustainable revenue base to fund improvements to the wellbeing of New Zealanders and their families. This means it is important for everyone to pay their fair share of tax in New Zealand.
We understand that there has been significant international concern over the perceived exclusion error of gig economy workers from a tax compliance perspective. It has been argued that this exclusion error is mostly caused by deficiencies in the current international tax rules, which have not kept up with digitalisation and other modern business developments. While the Discussion Document canvases the possibility of making it easier for people who earn income through digital platforms in the gig and sharing economy to comply with their tax obligations in New Zealand, in our view the Government of New Zealand would be better served devoting its efforts to formulating an internationally agreed solution at the OECD to update international tax rules to account for the challenges presented by the rapid digitalization of the economy. We therefore believe that the wider impacts, in terms of reputational damage of New Zealand as an open digital economy, and the chilling effect the tax may have on investment and the risk of retaliatory measures from other countries, will have long term negative consequences for the country’s tech sector.