New Zealand needs to take a bigger tax bite of Apple

“Like many, I have been watching the debate over the amount of tax paid by multinationals like Apple, Google and Facebook among others, operating in New Zealand. This has been running on and off over the past few years and again raised its head over the holiday period,” Murray Goldsworthy, a former retail executive, writes for The New Zealand Herald. “One of the most striking features of this debate seems to be the amount of hand wringing over how we need an international solution to this, how we are waiting to reach agreement on how it should be tackled on a global scale. This seems about as likely to occur as an agreement on global carbon dioxide production limits.”

Goldsworthy writes, “Apple has so much cash in the bank that it could pay off every residential mortgage in New Zealand and still have cash left over.”

MacDailyNews Take: We understand it’s an example to show that Apple has earned a lot of money, but it’s an unfair example that attempts to appeal to people’s emotions rather than to their intellects. Did Apple take out those mortgages? No. Are they going to pay off your mortgages? No. You are responsible for your own financial obligations. It wouldn’t be great if you took Apple’s money in order to pay off your country’s personal mortgages, it would be stealing in order to evade personal responsibility.

Goldsworthy says New Zealand should “tax multinationals based on their stated sales in New Zealand, make them show where the difference in values occurs, instead of allowing them to charge a higher cost price for their items to New Zealand subsidiaries. Make them prove why it is different, why they make substantially more elsewhere for the same items. Make them pay their fair share of tax on activity in New Zealand. Give us our bite of the Apple. It’s fair, isn’t it?”

Read more in the full article here.

MacDailyNews Take: Apple pays its legally required share of taxes in every country in which it operates, including New Zealand. Nothing is more “fair” than that. If you don’t like the laws of your country, work to change them, as Goldsworthy is trying to do with this article.

16 Comments

  1. I’d like to see the #’s broken down for Facebook and Google… why always pick on Apple. Apple pays more tax than Facebook and Google by percentage and revenue in many countries around the world. This article is next to useless if we cannot see Facebook, Google or other multinational American based tax numbers for a basis comparison.

    1. Last week they were asking questions of Facebook too, so not just Apple is being singled out (except in this article). I think the real issue they have (but aren’t able to articulate it properly) is tax laws in *all* countries need to have a ‘fair” way of calculating what is owed to each nation they are doing business in.

  2. Actually, I wish every country but the USA would raise their tax rate on Apple! The USA would start looking like the better answer when ongoing initiatives come up for renewal and new ones are looking for a base of operations!

    1. Perfect, something we can agree on. 33% flat tax on everybody with absolutely no loopholes no deductions no way for the rich to weasel out of their portion

      This ayn rand economist used an example from the Great Depression like thats supposed to actually reflect reality as millions of people were no longer at work

        1. Fwhatever, you lose all credibility (as if you had any) when you reference a forecast as a “fact.” In addition, President Obama is definitely *not* stupid. You may not like him. You may disagree with him. But labeling him as stupid is *not* a fact.

          The problems that I have with you and your ilk is that you are quick to criticize, eager to label, deft with the spin, and impossible to work with in a reasonable manner. President Obama’s biggest failing is that he wanted to lead bipartisan actions, but ended up falling for the GOP strategy of stringing him along while obstructing and undermining him at every turn. Once the Tea Party invaded Congress and brought the House of Representatives to gridlock, the President’s power bloc was broken and the gloves came off. I have a problem with any party, any politicians, whose primary goal is to defeat the incumbent at any cost, even to the extent of dangerously dividing and weakening this country.

          If the GOP had worked with the Dems to attempt to craft good policy in everything from tax reform to regulation reform to immigration reform to every friggin’ other thing that needs to be done, then we might have made some meaningful progress over the past five years. Instead, the GOP bitches and moans over “Obamacare” legislation that the GOP did everything that it could to sabotage, discredit, defund, and otherwise destroy without providing any constructive alternative for the tens of millions without healthcare coverage. News flash to the far right – this country is not working all that well and hasn’t for quite some time through a series of Democratic and Republican administrations and Congressional power bases. If your GOP policies were so good, then why did eight years of President Bush end up in disaster?

          The answer is not in political standoff. I am not a Democrat or a Republican. However, when forced to choose the lesser of evils, I all too often face the facts that the GOP repudiates good science on a regular basis, is all too willing to give into its right wing base to legislate religion into the government, and regularly demonstrates disdain for LGBT and women’s issues. The Democratic platform has its issues, as well, but I cannot abide anyone or any group that refuses to reasonably consider and debate policy based on strong, well-supported science and demonizes LGBT and women’s rights activists.

          If I had my way, all of the political parties would disappear so that this country could start fresh.

        2. If you read the whole report it states that due to employees no longer needing to worry about their health care costs some may opt out of working longer and just enjoy retirement. Also some younger workers may work less since their health care is covered now.

  3. “instead of allowing them to charge a higher cost price for their items to New Zealand subsidiaries”

    This just might surprise this wanker: Apple does not set the prices that the subsidiaries charge. The subsidiaries set those prices.

    Had this question answered by Ron Johnson when he was in Sydney for the Apple Store opening. AppleAsia is independent of Apple’s pricing policy.

    Mr. Goldsworthy you may want to give AppleAsia a call in Singapore. I am sure that they will have a sympathetic ear – all the way to the bank.

    Cheers, Kiwi.

    1. Of course Apple sets the prices for its subsidiaries. They submit their plans and budgets – including their currency hedging requirements – to HQ before they get approved.
      Apple forecasts using these plans.
      Apple Inc also uses its massive size to get the best deals for its currency hedges, transport rates, real estate deals, supply chain costs etc. Otherwise that would imply they just leave it up to each individual country to do that and come up with whatever cost of doing business that adds up to so they can set a price and then Apple Inc just has to live with the result.
      It’s pretty clear that countries like Australia have been given increasingly favourable treatment in recent years as one of the few consistently growing economies since the GFC and as a territory that has a revenue share for Apple products out of all proportion to its population, that’s why we get new products launched on the same day as the States, UK, etc despite our relatively small size. That treatment extends to Apple having harmonised prices in $A to the USD price several years back, that can’t be just a coincidence that the local entity decided to backtrack on years of charging a premium over the currency-adjusted price because they felt like it, rather than a change in strategy from the top to ensure that the money keeps flowing in from a valuable territory.

  4. Here is a decent explanation on the issue of tax minimisation by multinationals. It sites an example of Google in Australia.

    http://theconversation.com/multinationals-tax-avoidance-and-paying-their-fair-share-15130

    As MDN points out (ad nauseum), the companies in question, including Apple are obeying the law. However, for Apple, and every other large multinational, actively avoid tax by using structures in low or no-tax jurisdictions to transfer profits from one country to the next. The article makes the point that this practice should be addressed legislatively and that the fair value profits (i.e. without transfer pricing for “IP” to low tax jurisdictions) should be subject to local taxes.

    Tax minimisation, by utilising loop holes in the law, is part of a company’s obligation to its shareholders. Taxation, is the responsibility of a government on behalf of its constituency. Tax reform is required to more equitably spread the burden and will most likely result in a reduction of the marginal tax rates for all.

  5. Apple pays a federal sales tax (GST) in NZ and OZ, VAT in Eurozone and articles like this forget that these taxes bring in significant revenues and the rates of tax are set by the countries wherein the sales occur. The U S hath no such federal taxes.

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