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."

Comments

That's their job

[Notabadguy]

"but it looks like their tax department is even more innovative than their product designers."

That's their job. Change your laws.

Re: That's their job

[Anonymous Coward]

It's not even that.

Apple Australia and Apple NZ deliberately run at no profit, because they are not meant to run a profit. There job is to get products in people hands and handle returns.

If they make money, Apple would just charge Apple NZ more money for products, until they make no money.

Apple (ireland?) buy all the products from apple china and sell them to Apple NZ at a profit.

Every government wants in on this.

The truth is, governments are prepping for a tax on revenue, essentially a value add / gst tax increase, but not called that.

Re:That's their job

[Anonymous Coward]

I hope people understand the consequences of demanding changes to taxes for corporations. I'm not defending the status-quo, but you have to understand how US taxes are out of step with the rest of the world.

US companies are taxed, no matter where their income is generated. US citizens are taxed no matter where their income is generated. Therefor US companies and US citizens are not competitive with foreign companies or foreign workers. The US only gets away with it's taxes because moving companies is impossible (eg burger king merging with tim hortons and thus becoming a canadian company) without a huge expense of buying and creating numbered companies that exist for a short period of time. US citizens are not mobile like EU citizens are.

So you have two options, either make trade with the rest of the world ridiculously expensive with tariffs, thus protecting the domestic workforce and domestic corporations from having to compete, OR you force your domestic workforce and corporations to compete. Trump is going to try the former through regressive policy.

What would fix things, or even the playing field is by literately getting rid of corporate taxes and push ALL taxation onto the workforce. Because rich people create shell corporations to hold their assets, they love this idea. But it's not good for people who can't do that. So the correct fix for this is to tax people based on where they own property. So unless you never want to "own" a home, you pay taxes everywhere.

Since US taxes are out of step with the rest of the world (the only country that requires you to pay taxes by virtue of being born a US Citizen) that has to change.

So basically, if you own a home, you pay worldwide income taxes to that country that home is owned in. If you have a home in two countries, then guess what, you pay taxes in both places. Minimize the tax burden by declaring "non-immigrant(alien) resident" and split the taxes between each country that you own a home in. You'd do this by indicating the address of every home owned, and dividing the taxes by all of them. So if you own 3 homes, 1 in Canada and 2 in the US, then you pay 1/3 of Canada's taxes to Canada, and 2/3rds to the US, and the IRS and CRA will simply verify that taxes have been paid in each others country. Problem solved.

To solve the corporate taxation problem, you make sure that "wealth holding companies", numbered companies, etc, play no corporate taxes to any government, but must pay out 90-100% of profits (eg like a REIT or Income Trust) or re-invest those funds (eg they can not be paid to anyone) if directed to do so. That way the tax payers are consistently paying taxes on capital gains, it's like having a personal bank that pays high interest.

Re:That's their job

[serviscope_minor]

Indeed. How many individuals "do the right thing" and pay extra taxes beyond what they are legally required to pay?

Many.

Over here (the UK) there's all sorts of weird shennanigans you can pull if you put in the effort by contacting via offshore companies, and every so often you hear about people in the news doing so. Such things are available to everyone in principle. Most people don't do that and simply take salary the normal way and pay taxes the normal way.

Most people don't "like" paying taxes and grumble about them except that we all like our smoothly operating first world country with a high standard of living. Combine the awkwardness of actually setting up such a scheme legally with the vague feeling of unease many people get due to not being psychopaths and realising that not paying their fair share is bad and the result is most people pay a reasonable amount of tax.

It is not Apple's fault that NZ has dumb tax laws.

See this is why we can't have nice things. It's very hard to set up laws that allow reasonable business things and can't be abused. Because of scum like Amazon, now every small company has to deal with the horror of VATMOSS. Your idea to fix the laws is great and all but it will hit every single company that legitimately licenses IP of various sorts from abroad in a perfectly normal, non tax dodging way.

The only fiduciary duty that company directors have is to not fuck up egregiously or with intent. You can check the case law if you like, but until you can provide a reference where someone actually won a lawsuit over breach of fiduciary duty for merely not maximizing profits, I won't accept such a duty exists. There's also duties in many countries about public good as well.

Someone, somewhere chose to dodge those taxes. Just because they were able to get away with it doesn't mean it wasn't their fault. Ultimately people are responsible for their actions.

Re:If it's legal...

[Anonymous Coward]

Seriously, if it's legal, what of it?

There is legal and there is ethical. Only people in the law profession put the former before the latter.

After all, everything slave owners did and the Third Reich (oh my Godwin!) was entirely legal at the time.

VAT

[blogagog]

The VAT tax rate on that $4.2 billion is 15%. New Zealand made a lot of money off those iphone sales.

Re:VAT

[haruchai]

The VAT tax rate on that $4.2 billion is 15%. New Zealand made a lot of money off those iphone sales.

And all those taxes were paid by New Zealanders. Who still had to pay other taxes.

Re:sorry, no

[sit1963nz]

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.

Re:If it's legal...

[cas2000]

Nope. Tax evasion definitely falls into the former category, wrong regardless of "legality". Especially if achieved via legalistic shenanigans. And doubly so if those shenanigans are only possible due to favourable tax laws and interpretations obtained via corrupt political lobbying and campaign financing.

Corporations benefit from all the things that taxes provide - roads, police, education, and thousands more - so they should contribute to them as well.

hate to break it to you, but you're NOT a temporarily embarrassed millionaire. These tax scams you're championing (out of some brainwashed mindless fantasy that one day you'll "make it" and be part of the exploiter classes rather than the exploited) are NEVER going to benefit you. They're stealing from you, and from everyone else.