If you follow the OECD’s tax portal, you are possibly aware of the OECD Model Rules for Reporting by Digital Platforms. However, even if you were not up to date with the OECD’s work in this area, you may still have made note of the inclusion in the recent tax bill (Taxation (Annual Rates for 2022–23, Platform Economy, and Remedial Matters) Bill (No 2)) (“the Bill”), of the proposal to implement an OECD information and reporting exchange framework in New Zealand that would require New Zealand-based digital platforms to provide Inland Revenue (IR) with information annually about the consideration sellers on those platforms received from relevant activities. IR would use that information in its administration of the tax system where the information is related to New Zealand tax residents and would share information with foreign tax authorities where the information is related to non-residents.
The platform economy (also referred to as the gig and sharing economy) refers to economic activity facilitated by digital platforms (such as smartphone apps) that connect buyers with sellers who provide their skills, assets, and labor. Examples include accommodation services (such as short-stay and visitor accommodation), transportation services (such as ride-sharing and delivery services), and personal and professional services (such as tutoring, gardening, web, and graphic design) provided through digital platforms.
New Zealand is one of 28 countries and jurisdictions that has recently signed the multilateral competent authority agreement for the automatic exchange of information, which paves the way for information-sharing proposals included within the Bill. In this regard, the Bill proposes that the OECD’s information reporting and exchange framework would take effect in New Zealand from the 2024 calendar year, with the first information reporting obligations (and exchange) occurring in early 2025.
The following activities are covered by the new legislation:
- the rental of immovable property (including commercial, short-stay, and visitor accommodation);
- personal services (including any time- or task-based work, such as ride-sharing, food and beverage delivery, and graphic and web design services);
- the sale of goods; and,
- vehicle rentals.
Operators of digital platforms would be required to conduct due diligence procedures for sellers on their platform, collect and collate information, and report this to Inland Revenue.
The information would relate to a calendar year and would need to be provided by 31 January following the end of the calendar year.