Apple has come under fire for not paying any tax in New Zealand. The Californian company reportedly sold NZ$4.2 billion worth of products in the country, but didn’t pay any tax at all.
According to a report by the New Zealand Herald, Apple paid $37 million in income tax based on its New Zealand sales, but that money went to the Australian government, since that’s where Apple’s NZ operation is run from.
There has been an arrangement in place since at least 2007 where the tax on Apple’s products in New Zealand is sent to Australia, and experts confirm that the arrangement is legal under New Zealand law, the report says. But many strongly disagree with the arrangement.
“They’re operating completely illegally,” says Deborah Russell, a university lecturer and elected member of the New Zealand Labour Party. “It’s just that age-old distinction between legality and morality.”
Apple’s tax technique is also used by local exporters, according to John Payne, a spokesperson for a New Zealand lobby called the Corporate Taxpayers Group. “It’s Tax 101 in terms of activity,” he said. “And it’s quid pro quo for us when we’re operating similarly in another country.”
The New Zealand Herald article highlights that, if Apple had “reported the same healthy profit margin in New Zealand as it did for its operations globally,” the company would have paid close to NZ$356 million in taxes.
An Apple Australia representative fired back saying: “Apple aims to be a force for good, and we’re proud of the contributions we’ve made in New Zealand over the past decade.” The representative added: “Because our products and services are created, designed, and engineered in the US, that’s where the vast majority of our tax is paid.”
Another editorial run in the New Zealand Herald did acknowledge that, since Apple’s products are produced in the United States, “it is understandable” that New Zealand’s tax revenue from the company “may be small”. But the article continues to say that, “in fairness, it must be more than zero.”
Apple has faced other tax controversies around the world in recent years. News broke on August 30 last year that after a three-year long investigation into tax avoidance by Apple, the European Commission concluded that the tax arrangements between Ireland and Apple are illegal.
Ireland’s corporation tax rate is already minimal at just 12.5 percent. But the commission found that Apple’s tax deal in Ireland was so low that the company was only paying an effective corporate tax of less than 1 percent.
The Irish government disputed the claim in December, presenting its argument that Apple does not owe 13 billion in back-taxes to Dublin, and claimed that the EU breached state sovereignty in relation to its interference in this issue.