New Zealand withdraws 3% Digital Services Tax bill

New Zealand scraps DST bill on US tariff threat

On 20 May 2025, New Zealand’s Minister of Revenue, Simon Watts, announced that the government has decided not to proceed with the Digital Services Tax (DST) Bill, which had been introduced by the prior administration in 2023.

The bill was initially proposed in response to the slow progress on reaching a global consensus for taxing the digital economy. However, the current government has now opted to withdraw the bill in favour of supporting an internationally coordinated solution, OECD Pillar 1 reforms. However, the threat of US DST retaliatory tariffs has contributed to the U-turn.

Other countries have also revised their DST plans following the February US announcement:

• UK 2% DST may be reduced or withdrawn based on upcoming digital services agreement negotiations with the US;
• India Equalisation Levy has been scrapped; and
• Italy DST is facing reduction following agreement with the US earlier this year.

“We have been monitoring international developments and have decided not to progress the Digital Services Tax Bill at this time,” Minister Watts said. “A global solution has always been our preferred option, and we have been encouraged by the recent commitment of countries to the OECD work in this area.”

As a result of the withdrawal, the forecast revenues from the proposed DST have been excluded from the Crown accounts, reflecting the shift away from a unilateral approach.

Dec 2026: proposed 2025 digital services tax on non-resident providers looms

Doubts remain on the 2025 imposition of New Zealands’ Digital Services Tax (DST) as  struggle. With the threat of retaliatory tariffs from the US following the Republican White House and Congress wins, a number of similar countries are debating whether to progress with such levies which largely fall on US digital giants.

At this late point, the legislative proceedings required to enact the levy would be challenging for enactment for the start of 2025. However, the forecast revenues are included in the 2024 budget.

The 2023 coalition government in New Zealand reintroduced the September 2023 draft legislation for a DST which would tax sales by non-resident providers of in-scope services to consumers. New Zealand’s moves shows frustrations with slow progress on a new global regime being championed as  by over 140. A moratorium for a further year on new DST was announced at the OECD in July 2023. Countries such as Canada DST are still going ahead in 2024.

The aim of DST’s  is to close the corporate income tax loophole under current global tax rules for foreign providers. This includes Facebook, Google and Apple earning income from social media platforms, search engines, and online marketplaces.

The implementation date would be 2025, although the Bill includes the potential to defer collections until up to 2030 if progress is being made by the OECD.

New Zealand will mirror the common thresholds for affected businesses:

1. Turnover above €750m per year globally; and
2. Turnover above NZ$3.5m in New Zealand

New Zealand GST on digital services was separately introduced in 2016.

Asia Pacific Digital Services Taxes (DST)