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Apple Paid $0 In Taxes To New Zealand, Despite Sales of $4.2 Billion (nzherald.co.nz)
Apple paid no income tax to New Zealand's Inland Revenue Department for the last 10 years, according to an article shared by sit1963nz, prompting calls for the company to "do the right thing" even from some American-based Apple users. From the New Zealand Herald:
Bryan Chaffin of The Mac Observer, an Apple community blog site founded in 1998...wrote that Apple was the largest taxpayer in the United States, but 'pays next to nothing in most parts of the world... [L]ocal taxes matter. Roads matter. Schools matter. Housing authorities matter. Health care matters. Regulation enforcement matters. All of the things that support civil society matter. Apple's profits are made possible by that civil society, and the company should contribute its fair share.'"
Apple's accounts "show apparent income tax payments of $37 million," according to an earlier article, "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. Had Apple reported the same healthy profit margin in New Zealand as it did for its operations globally it would have paid $356 million in taxes over the period."
"It is absolutely extraordinary that they are able to get away with paying zero tax in this country," said Green Party co-leader James Shaw. "I really like Apple products -- they're incredibly innovative -- but it looks like their tax department is even more innovative than their product designers."
Apple's accounts "show apparent income tax payments of $37 million," according to an earlier article, "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. Had Apple reported the same healthy profit margin in New Zealand as it did for its operations globally it would have paid $356 million in taxes over the period."
"It is absolutely extraordinary that they are able to get away with paying zero tax in this country," said Green Party co-leader James Shaw. "I really like Apple products -- they're incredibly innovative -- but it looks like their tax department is even more innovative than their product designers."
"but it looks like their tax department is even more innovative than their product designers."
That's their job. Change your laws.
People always complain about this sort of thing, but you know most individuals would use legal tax "loop-holes" to avoid paying taxes if they could (and many wealthy people come close). Apple and all the other zero-tax paying companies are not non-profits, they're in it for the money. If people are upset about all this, perhaps our elected representatives can change the laws? Seriously, if it's legal, what of it? Like I said, most people would do the same if they could...
If you want news from today, you have to come back tomorrow.
The VAT tax rate on that $4.2 billion is 15%. New Zealand made a lot of money off those iphone sales.
This is a basic problem with corporate income tax: everyone in the world feels they are entitled to their "fair share". Corporate tax itself is a kind of double taxation: a corporation is made up of people who pay income tax. In addition, there is sales tax paid on all goods sold in a given country. I imagine a great deal of sales tax has been paid on Apple products in New Zealand, money the government wouldn't have if Apple didn't sell products there.
The problem with corporate income tax is that it is always possible for a mutlinational corporation to shift its profits to whichever country offers the lowest tax rate, unfairly enriching that one country. The best solution is probably to get rid of corporate income tax altogether, and make up the difference with sales taxes. (After all, the cost of corporate taxes are passed along to the consumers anyway.) This way, there's no arguing about who is entitled to the tax money: it's paid by the consumer wherever the sale takes place. This isn't the first time corporate taxes have caused problems: remember the court battle in which the E.U. argued that Apple owed more taxes to the Irish government, despite the fact that the Irish government didn't even want those revenues? This is the kind of absurdity that results from corporate taxes.
If I can be modded down for being a troll, can I be modded up for being an orc, or a balrog?
So where is your proof that New Zealand firms operating in the USA do not pay US taxes ?
If Apple does not want to pay taxes on profits like other businesses then perhaps an import duty on Apple gear is warranted, currently there is none.
Sales taxes are paid by the consumer, they are not based on business profits, they are collected and passed on by the retailer.
So for example if I buy an Apple computer at Harvey Normans, Harvey Normans passes on the sales tax to the IRD, not Apple.
Another approach could be
If Apple wants the protection of the laws here in New Zealand then it should pay taxes to enjoy of the benefits of citizenship
If it does not want to pay taxes, then it places its self outside of the laws, so for example they would have no patent or copyright protection in NZ.
Currently corporates have all the benefits of a country and don't pay any of the costs.
As for WHY apple should pay taxes.
Lets assume YOU are in business, and at the end of each year you have $1 Million in profits, and from this you pay $300,000 in taxes. Those taxes are used for roading, infrastructure, the legal system, etc etc etc, i.e. all the things from a civil society you benefit from.
Now Apple comes along, they are "outside" you country, then enjoy ALL the benefits of roads etc etc etc that you do, but they don't pay taxes, so in real terms they are $300,000 better off each year than you, money they can put in the bank for a rainy day.
We have a housing crisis, and business down turn, things are rough and you have to close down. Apple on the other hand has a huge stock pile of cash so they can ride out the rough times (because they did not pay taxes), so they remain in business where by you loose your business and your house.
THAT is why corporates should be expected to pay taxes, so they compete on a fair and equal basis with those local companies who can not dodge the taxes.
Or to put in in an American setting, if a Chinese firm is able to dodge taxes and use that tax advantage to put an American company out of business causing people to loose their lively hoods and houses, do you STILL think it is fair the Chinese firm pays no taxes.
If people are upset about all this, perhaps our elected representatives can change the laws?
The problem with this is that these companies have an army of lawyers trying to find holes in whatever laws are passed. They can find these holes faster than laws can be patched because governments have to tread carefully to make sure new laws do not accidentally penalize companies who are behaving themselves. The only way I can see governments defeating this is by giving themselves far more discretionary taxation power to target individual companies than they currently have and that can lead to abuse of that power if we are not careful.
New Zealand has a population of 4.471 million. $4.2 billion / 4.471 million = $939 per capita spent on Apple products.
China has a population of 1.357 billion. Apple's annual revenue in China was $48.5 billion, or $36 per capita.
Europe has a population of 743 million. Apple's Europe revenue was $49.95 billion. Or $67 per capita.
Japan has a population of 127 million. Apple's Japan revenue was $16.92 billion. or $133 per capita.
The U.S. has a population of 319 million. Apple's revenue in the Americas was $86.62 billion. Even if you attribute 100% of that to the U.S., that only works out to $272 per capita.
So either New Zealanders absolutely love buying Apple products by nearly an order of magnitude more than the rest of the developed world, or the $4.2 billion figure is somehow exaggerated.
It doesn't matter who pays the tax. It's the end user in all cases. Whether Apple sells it's phone $1000 and pays the govt $150 or sells its phone $850 and the user pays the govt $150 makes no difference other than semantically.
You are talking about tax incidence. But you forgot about an important detail. Companies cannot always simply pass on any taxes. Just because the government assigns a particular tax rate to my company doesn't necessarily mean I can raise prices to compensate. The reasons for this vary but usually it is because of competitive pressures. So in many cases the company ends up eating some percentage of the cost and their profits are lower. It's unclear if this would apply in Apple's case but it is clear that Apple cannot simply charge any amount they want. At some point the price gets high enough that people will seek out alternatives which is why Android has huge market share despite modest profits. In the long run (years) all prices are variable but for shorter periods of time there often are constraints on pricing power.
But if a company can manage to (legally) dodge all taxes that can be a huge competitive advantage in pricing power. It allows them to sell a product for less money than would otherwise be possible, even if it is a premium product with a fat margin.