Apple pays zero tax in New Zealand despite sales of $4.2 billion since 2007

“Consumer electronics giant Apple paid no income tax to Inland Revenue over the past decade despite selling billions of dollars worth of iPhones and iPads to New Zealanders,” Matt Nippert reports for The New Zealand Herald. “Green Party co-leader James Shaw said Apple was not paying its fair share. ‘It is absolutely extraordinary that they are able to get away with paying zero tax in this country. I really like Apple products – they’re incredibly innovative – but it looks like their tax department is even more innovative than their product designers,’ Shaw said.”

“Spark chief executive Simon Moutter said Apple’s zero tax bill reinforced his concerns that New Zealand’s tax base was threatened by the burgeoning wave of technology companies,” Nippert reports. “‘Some of these companies are willing to use every trick in the book to minimise the tax they pay towards the cost of running our schools, hospitals and social infrastructure,’ Moutter said.”

MacDailyNews Take: Blah, blah… Let’s go hunting for the buried lede…

“According to financial statements for the company’s local subsidiary, Apple Sales New Zealand, total sales here since 2007 amount to $4.2 billion. The accounts also show apparent income tax payments of $37 million – but a close reading shows this sum was actually sent abroad to the Australian Tax Office, an arrangement that has been in place since at least 2007,” Nippert reports. “Had Apple reported the same healthy profit margin in New Zealand as it did for its operations globally it would have paid $356m in taxes over the period.”

MacDailyNews Take: Yes, and had pigs sprouted wings, jet travel would be far more perilous. Now, where’d Matt bury that lede? Oh, here it is, way down in the 15th paragraph…

“Apple’s New Zealand operations are wholly owned by an Australian parent and appear to be run from there,” Nippert reports. “A tax treaty between the two countries sees dual claims on income tax default to where the company is controlled.”

Read more in the full article here.

MacDailyNews Take: Legal.

26 Comments

  1. Pay your way fairly Apple. Stop looking for ways to ignore paying tax when you can like other businesses have to. Doesn’t surprise me one bit though with the likes of Apple in overseas operations with exploitation of workers and exploitation of tax loopholes is their speciality.

    1. Apple can’t get away with anything any country doesn’t sanction Featherbrain. Companies don’t pay more than they have to. We’ve had this discussion before. What part of that don’t you understand? Or do you pay an extra 20% in taxes even though you don’t need to just to be a good citizen yourself? Doesn’t surprise me one bit you jump on this without a whit of intelligence understanding how this works.

    2. It’s called reciprocity. Did you read this section:

      ““Apple’s New Zealand operations are wholly owned by an Australian parent and appear to be run from there,” Nippert reports. “A tax treaty between the two countries sees dual claims on income tax default to where the company is controlled.””

      Further, if you look at ONLY ONE part of a company, you are cherrypicking your info to tell the story you already wrote. Apple’s int’l sales division is only one part of the equation. They sell to the retail establishments. Those retailers pay income tax on the profit they make selling Apple products. The sales division typically makes far less than other divisions because it’s just acting like a distributor. There’s little value-added. So, if you cherrypick the sales distributor don’t be surprised to find their income is very low.

    3. Read the F’n article. Apple is paying its taxes fairly and legally. All of this is done according to international treaties. Apple cannot change those. Income Taxes, by law, are paid in large part, in the country in which a company is headquartered. If this were not the case, the bookkeeping would be a nightmare, and the cost of every product sold internationally would skyrocket.

      Don’t all for the “exploitation of workers” attributed to Apple in propaganda. Apple is in the forefront of workers’ rights and includes such rights in every contract it signs with suppliers. Apple has even pulled multi-billion dollar contracts from suppliers who have abused workers or employed underaged workers in violation of those workers’ rights. Apple puts its own employees into its supply chain to monitor working conditions to assure the safety, conditions, and wages being paid to workers on Apple products. Almost no other company in the field does this, satisfying themselves instead by joining industry Non-Profits who advocate for change instead. . . from a safe distance. Apple has been pro-active in this area since 2001. . . and has reaped a whirlwind of negative publicity from those who prefer to do it from a distance.

      Tax “loopholes” are merely laws that are placed by countries who wish to attract businesses to do business in their localities. If you want to get rid of them, change the laws. There is nothing illegal or unfair about them. Your ignorance does not make them unfair or illegal. . . and every business can take advantage of these laws. They are in the tax codes for a reason.

      Apple did not place them there. In fact, up until about five years ago, Apple did not even maintain a lobbying presence in Washington, D.C. . . nor did Apple, as a company, make large political contributions.

    4. Does the country have a sales tax?
      Thank Apple for tax revenue on their products sold there.
      Does the country have various employment tax schemes like the US (Social Security, workman’s comp, shared insurance costs, etc etc)?
      Thank Apple for those taxes levied on th m due to having employees.
      Property taxes?
      Than you, Apple.
      Utilities taxes?
      Thank you, Apple.

      Greedy countries with socialist models will continue to attack the hands threat feed the, because that’s about dirty stinking politicians can do for themselves to make a buck and sustain their progeny until the eventual collapse that all Marxist countries follow.

      I’d Trump could rid the US of the Democratice/Marxist Party’s socialist infection, Liberty might survive…but I would hold your breaths….

  2. This goes both ways. Countries tend to have loopholes for their own elite. The fair way to get people and companies to pay their fair share is to close the loopholes at the risk of losing business.

    Close the loopholes, don’t go snipe hunting.

  3. I’ve said this many times. If governments are unhappy with the tax situation for multinational companies then they need to change the legislation.
    Don’t go pointing fingers at others when the issue lies with all the loopholes the politicians allowed over numerous years of lobbying action.
    I personally prefer that corporations pay tax in the country that the revenue came from. But I do not blame Apple for using the tax code to their advantage.

  4. No no no. It’s not Apple’s tax dept., it’s New Zealand’s own tax dept. & policies!!! Apple can’t do anything the country itself does not sanction. It the New Zealand political clueless are looking for blame, look in a mirror morons.

  5. These Liberal reporters seem to be oblivious to the repercussions of their articles. International treaties have established where income taxes are to be paid. It is not a matter of opinion, it is a matter of international law. The taxes are paid where companies are headquartered. Even Australia does not get the majority of income tax on Apple’s revenue. The EU is trying to claim a lion’s share of Income Tax on sales in the EU for Ireland, contrary to these long standing laws and treaties. If this is upheld it will disrupt centuries of long standing treaties and law, causing chaos in the tax laws of all nations, including theirs. Apple is headquartered in the USA and California and pays its income taxes in those tax jurisdictions. Apple pays other types of taxes, such as sales, property, excise, payroll, some income tax, etc., in other tax jurisdictions. Many of those are deductible against Apple’s US Income Tax obligation as a cost of doing business.

    New Zealand headquartered businesses that do business in Australia and the USA will pay the bulk of their Income Tax in New Zealand, not in Australia or the USA although they may make a large percentage of their sales in those countries. Change the international tax laws, they’d lose this quid quo pro.

    These articles almost also misrepresent sales revenue as the base on which Income tax is to be calculated. . . further fanning the flames of economically and tax law ignorant readers. Revenue is not the basis of calculating income tax, but gross profit is what should be used to calculate Income Tax. Sales Revenue is the total of all sales at retail and the costs of those sales need to be deducted before one can determine profit. The numbers they use imply their nation is entitled to ALL the income tax generated by the profits or revenues, whichever number they use, blithely ignoring the fact that the profit was generated by thousands of economic inputs profit generators other than the final retail sale from dozens of not hundreds of different jurisdictions which made up the product.

    1. “New Zealand headquartered businesses that do business in Australia and the USA will pay the bulk of their Income Tax in New Zealand, not in Australia or the USA although they may make a large percentage of their sales in those countries. Change the international tax laws, they’d lose this quid quo pro.”

      Indeed. That point has been made by several of the more informed commentators here. It’s an area that quickly gets people fired up, but it’s not a simple matter. And it’s not just Apple getting stick in the NZ media. Google and Facebook are in the gun for the same reason. In Apple’s case it’s further complicated by the fact that Apple’s operations in NZ are, as the writer finally concedes, “wholly owned by an Australian parent”, and a tax treaty between Oz and NZ prevents a double tax take.

    2. You lost me with “liberal reporters.” I am tired of that bullshit. I do not add “liberal” or “conservative” on everything that I believe to be wrong or ridiculous. Label and disparage is lazy thinking. There is plenty of more objective stuff to read.

      You may have had some good points, Swordmaker. But I am not going to wade through your bias to find out.

      1. While not immune, NZ media outlets tend to be less affected by the “liberal vs conservative” bias that characterises much of the US media. However, in this case, it probably pays to look past the reporter to the politician he’s quoting. James Shaw is co-leader of the left-wing Green Party. With an election at the end of the year, Shaw doubtless feels the need for some grandstanding, and US corporations are an ideal target. Andrew Little, leader of the centre-left Labour Party has made similar comments.

        Less easily dismissed as “liberal” are the comments by the CEO of Spark (one of the big telecos in NZ) and John Key, the previous (centre-right) prime minister who personally tackled Mark Zuckerberg on this issue. So, position on the liberal-conservative spectrum is not the sole driver for raising concerns about zero or near-zero taxes paid by multi-billion dollar corporations in other countries.

        1. Does NZ have a Value Added Tax? Most of the stories comparing US taxes with the EU ignore the fact that companies are paying VAT there in addition to income taxes, while the US income tax is the major revenue source for the national government. It is naturally assessed at a higher nominal rate here than in countries with the additional VAT revenue..

          1. We have a VAT equivalent (sort of) called the Goods and Services Tax (GST) of 15%. Recently, and in response to pressure from local retailers, the government has imposed GST on all overseas internet purchases above NZ$60. GST is ultimately paid by the purchaser, and it’s my understanding that Apple ends up paying very little GST, mostly because of the Australian link; thus the fuss.

            1. ALL taxes on businesses, either goods or services, are paid by the purchaser. Don’t let anyone tell you differently. Those taxes are either paid overtly, as a line item in the money you pay such as a sales tax, or they are included in the price you pay. The business DOES NOT EVER PAY THOSE TAXES unless the taxes force them out of business by putting the price of the goods and services out of the reach of their customers and the business investors lose their investment!

              Apple would likely pay little Goods and Services Tax in NZ due to there being little gain in the value of the product in NZ. Again, this is due to the international Treaties being applied.

      2. Take away lazy weak argumentative tactics like these would eliminate 20% of botvinnik’s posts. The other 80% which are just pure content-free insults MDN should be filtering already.

        I like it.

      3. You should because it is that underlying bias in the reporters and their ignorance of economics and tax laws as well as a Liberal bias that results in these articles, every time. I do not add a label to everything I write either, but when it’s appropriate because of the bias I do. I don’t dismiss what they write out of hand, as you have just done, I read it.

  6. Seems like Apple sales generate 15% GST. How much more do they want? NZ corporate rate is 28% which is less than US. If Apple paid to NZ, it would be credit toward US taxes,

  7. The NZ government already takes a 15% g.s.t. cut of the $4.2 billion in sales revenue before it taxes any profit.
    Any claim that Apple does pay any tax is pure nonsense.

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