A tax expert is warning the Government that it will be tricky to slap taxes on digital giants.
Prime Minister Jacinda Ardern announced in a post-cabinet press conference on Monday a discussion document about taxes companies like Facebook and Google should pay will be released in later in 2019.
- Jacinda Ardern announces plans for new digital service tax
- 'Google tax' a good idea?
- Facebook bows to pressure, will start paying tax locally
"Highly digitalised companies, such as those offering social media networks, trading platforms, and online advertising, currently earn a significant income from New Zealand consumers without being liable for income tax," Finance Minister Grant Robertson said at the same time in a statement.
"That is not fair, and we are determined to do something about it.
"The current tax rules also provide a competitive advantage to foreign companies in the digital services field compared to local companies who offer e-commerce, online advertising, and social networking services."
Victoria University Adjunct Professor John Shewan told Newshub it's a real problem area.
"The old-fashioned tax system's simply not coping with the modern economy and it's absolutely right that we look at shaking it up.
"Exactly how you do it is the problem and the devil will be in the detail."
Prof Shewan said implementing the tax could cause problems for New Zealand consumers.
"It may well be is those companies simply pass that back to the New Zealand users so the tax ends up actually being borne by New Zealanders, so that's a big issue."
Mr Robertson said cross-border digital services are worth around $2.7 billion in New Zealand.
A number of countries - including the UK, Spain, Italy, France, Austria and India - have enacted or announced a DST.
Australia is also considering a digital tax.