Chapter 1 – Introduction
1.1 Recent years have seen the rapid development of digital platforms which quickly and easily connect a product or service provider with potential buyers. This emerging model of business, referred to as the gig and sharing economy, is driven by modern technologies that enable digital platforms to facilitate transactions between sellers and buyers, often through a mobile application. A study of the major global markets placed the size of the gig and sharing economy at US$204 billion in 2018, with that size projected to reach US$455 billion by 2023. As a result of growth in the gig and sharing economy, many people now have an opportunity to offer their goods and services to a wide audience of potential buyers in a format that is flexible and accessible.
1.2 The emergence of the gig and sharing economy has created a need for governments across the world to re-evaluate whether their tax systems remain fit-for-purpose. The Government wants to explore opportunities to ensure that the tax system functions fairly and supports those who earn income through the gig and sharing economy.
1.3 The purpose of this discussion document therefore is to consult generally on matters relating to New Zealand’s tax settings applicable to the gig and sharing economy. It considers options that the Government is considering that have the objectives of minimising compliance costs for digital platforms, improving fairness for traditional sellers, enhancing tax compliance generally, and making life easier for sellers entering the sector who may not be familiar with business tax obligations.
1.4 Chapter two provides background and context on these issues and discusses the opportunities and options available to address these issues.
1.5 Chapter three consults on whether New Zealand should implement rules developed at the OECD which require digital platforms to provide information to tax authorities that would then be shared globally. The purpose of these rules is to create a global standardised approach to information collection and exchange to ensure that income from sales is taxed appropriately.
1.6 Chapter four considers whether GST should apply to all sales made through digital platforms and whether digital platforms should have a role of collecting GST on behalf of sellers that operate on their platforms. This is to improve fairness and support the long-term sustainability of the GST system. This chapter also draws upon OECD work on the impacts of the gig and sharing economy on GST policy and administration.
1.7 Chapter five summarises other potential opportunities to improve the tax system in the context of the gig and sharing economy. It consults on whether there are improvements that could be made to some of the existing tax rules, and whether the Government should consider further measures to help reduce compliance costs for sellers in the gig and sharing economy.
1.8 Several key terms are used in this discussion document. Unless otherwise stated, those terms have the corresponding meanings:
- Digital platform
- These are software platforms that connect buyers and sellers of goods and services through an online marketplace. This is not intended to include Application Programming Interfaces (APIs). This term is further defined in chapters 3 and 4 for the purposes of the proposals discussed in those chapters.
- The Council Directive (EU) 2021/514 adopted by the Council of the European Union on 22 March 2021. DAC7 is discussed further in chapter 3.
- Gig and sharing economy
- Refers to economic activity facilitated by digital applications (often referred to as “apps”) that connect buyers with sellers who provide their skills, labour and/or assets for a consideration.
- Model rules
- Rules developed by the OECD to allow tax jurisdictions around the world to share information relating to transactions on digital platforms. The model rules are discussed further in chapter 3.
- Registered person
- A person who is registered for goods and services tax under the Goods and Services Tax Act 1985. This also includes a person who is liable to be registered for GST under the Act.
- People who earn income through their activity on digital platforms.
How to make a submission
1.9 Submissions are invited on the options and proposals in this discussion document.
1.10 Your submission should include a brief summary of your main points and recommendations. Please also indicate whether officials from Inland Revenue may contact you to discuss the points raised, if required.
1.11 The closing date for submissions is 21 April 2022.
1.12 Submissions can be made:
- by email to [email protected] with “The role of digital platforms in the taxation of the gig and sharing economy” in the subject line, or
- by post to:
The role of digital platforms in the taxation of the gig and sharing economy
C/- Deputy Commissioner, Policy and Regulatory Stewardship
Inland Revenue Department
PO Box 2198
1.13 Submissions may be the subject of a request under the Official Information Act 1982, which may result in their publication. The withholding of responses on the grounds of privacy, or for any other reason, will be determined in accordance with that Act. If you consider that any part of your submission should properly be withheld under the Act, please clearly indicate this.