The role of digital platforms in the taxation of the gig and sharing economy

The Government is seeking feedback on proposals aimed at 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.

The gig and sharing economy refers to economic activity conducted through digital platforms that connect buyers with sellers offering their skills, assets, or labour for hire.

Common examples include ridesharing services, food delivery services, and short-stay accommodation. The development and growth of apps which facilitate such economic activity has in recent times seen the rapid growth of this sector. As it’s expected to continue growing, it is necessary to ensure that people participating in this emerging market are meeting their tax obligations.

A Government discussion document, The role of digital platforms in the taxation of the gig and sharing economy, discusses the proposals and areas for feedback including:

• Implementing the information exchange and reporting framework developed by the Organisation for Economic Cooperation and Development (OECD) allowing tax administrations internationally to exchange information about sellers’ activities and incomes earned on digital platforms.
• Requiring digital platforms to charge GST on all sales of services in New Zealand that are made through digital platforms.
• Whether there are any other changes to the tax rules that could be made to support sellers in the gig and sharing economy to comply with their tax obligations.

The proposals are aimed at the digital platforms. If the proposals become law, digital platforms would need to report information to the tax authority where they are headquartered, and that information would then be exchanged between other tax authorities once a year. Digital platforms would also begin charging GST on all sales made through them.

Submissions closed on 21 April 2022.